Capital Markets Union and ending short-termism: lessons from the European Commission's public consultation

Abstract

The European Commission's initiative to establish a Capital Markets Union is in sharp conflict with the more radical goals of downsizing significantly certain financial activities and firms that have become too-big-to-fail and too-big-to-govern and of ending or at least drastically limiting extreme speculation and short-termism in finance and the real economy in order to increase financial stability. The recent public consultation on the Commission's Green Paper, Building a Capital Markets Union gives evidence of how weak such demands are compared to calls for deeper capital markets with more “shadow banking” and rebuilding (sound) securitisation. The consultation is an example of how framing the problem and the refined Better Regulation agenda influence post-crisis financial reregulation and help to marginalise more radical ideas demanding a return to a more traditional banking model and transforming finance back to serving the real economy.