Closing the funding gap: Competition at the heart of the single market

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With over 450 registrations from across Europe, the 2013 ECMI Annual Conference brought together once again international experts in capital markets from industry, policy-making and academia for a full-day discussion in Brussels on October 17th. This year’s conference explained how competition in the single market can help to fill the funding gap. The conference was structured around three panel sessions: The first session tackled the issue of competition among member states and the crucial problem of finding a balance between competitiveness and federalism in the Eurozone. The second session analysed the status of competition among financial market operators assessing the progress of the pan-European capital markets project. The third session focused on the hot topic of competition among funding sources and the role of capital markets in the promotion of innovation and economic growth

Despite the Eurozone begins to see the light at the end of the tunnel, uncertainty remains on the speed of institutional reforms, such as banking union and greater harmonisation of fiscal policies. More symmetry is needed for the implementation of structural reforms by core countries and to ensure a mechanism of governance that does not create distortive incentives.

The financial market is a competitive setting that exhibits characteristics similar to multi-sided platforms. Therefore, it should be subject to ongoing supervision from competition authorities, while financial stability concerns are less significant than some years ago. European capital markets infrastructures would need to find a way to succeed in a more competitive environment globally, perhaps by promoting a truly pan-European market architecture

Governance is an essential aspect to ensure greater and better access to finance to corporates. Capital markets are testing several new tools to revive funding for fundamental parts of the economy, such as small and medium enterprises. The dilemma of promoting the risk-taking needed for growth while deleveraging and de-risking the financial system remains a tough objective to achieve for policy-makers in the aftermath of the crisis.

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