Capital Markets Union: Deepening the Single Market Makes Sense, but Don't Expect too Much

The Capital Markets Union (CMU) is a flagship project of the European Commission that promotes a deepening of the financial markets. It aims at opening up new sources of funding for SMEs, as well as improving the matching between savers and borrowers. Additionally, CMU is supposed to increase the absorption capacity for asymmetric country-specific shocks. Some even see the CMU as a substitute for a fiscal union. However, it is questionable whether deeper financial market integration will succeed and materialize in a political and economic environment filled with severe uncertainties.