Efficient public capital markets and their core role in driving European economic growth and investment

The economic fallout from the COVID-19 pandemic, aligned with high levels of public debt and a continuing over-dependence on the banking sector, underlines the importance of developing a more strategic approach towards the development of European public capital markets, to drive the recovery as well as sustainable, economic growth in the EU.

Our policy recommendations to overcome the effects of the crisis are based upon our mission and values.

The value of exchanges and public capital markets

It is the firm conviction of FESE members that European capital markets deliver great structural benefits to the EU. Among others, they:

• Contribute to the financing of European companies, from large caps to SMEs.
• Provide investment opportunities to all investors, notably retail, and contribute to financial stability by providing opportunities for financial diversification.
• Reduce the pressure on public finances via enhanced private investments and risk sharing and support an overextended banking system (e.g. securitisation).
• Guarantee participation in wealth creation for our society and complement public pension systems.
• Support transformational challenges (sustainability and digitalisation, in particular).
• Enhance competitiveness and attract global capital and investments.

European exchanges have always been at the heart of EU initiatives that strengthen European public capital markets and look forward to working with all stakeholders on achieving the ambitions set out by the CMU.

The EU is at a crossroad, the direction we take will determine our global competitiveness and ability to successfully manage the transformative challenges – such as climate change, digitalisation, strategic sovereignty. A collective action by European and Member State policy makers is needed to ensure that European companies, from large caps to SMEs, can raise finance efficiently through public capital markets, and that investors, particularly retail, benefit from the opportunities such investments provide. Financial Market Infrastructures and public capital market ecosystems will also play a central role in addressing these challenges by continuously providing finance to the real economy, contributing to financial stability and maintaining the efficiency of markets.

FESE strongly supports the European Commission’s new Action Plan on the Capital Markets Union (CMU) as well as the initiative to strengthen the international role of the euro.

In order to support these goals, a focus on three critical areas is required: inclusive growth, empowering investor participation in a sustainable economy and fostering transformative innovation.