Building a capital markets union (CMU), which is one of the European Commission’s top priorities, is therefore a step forward towards a more prosperous Europe. A properly designed and implemented CMU can also deliver greater economic and financial stability. From the Bundesbank’s viewpoint, CMU should in particular aim at fostering European equity markets.
Corporate finance in Europe is still heavily reliant on debt, first and foremost bank loans. Taking GDP as a yardstick, the EU banking system is four times larger than its US counterpart. Conversely, equity capital plays a minor role.