Capital Markets Union (CMU) is the EU's long-running project to integrate fragmented national capital markets into a single deep pool of equity and debt funding, reducing bank dependence, easing cross-border investment, and channelling household savings into productive risk capital across the bloc.
How it works
CMU works by harmonising the rules governing securities, insolvency, taxation, supervision, and post-trade infrastructure so that capital flows freely across member states rather than pooling within national borders. The aim is to let a saver in one country fund a firm in another, deepening equity markets and diversifying funding away from banks toward market-based finance.
Why it matters now
CMU sits at the centre of the 2024–2025 Draghi competitiveness agenda, which framed Europe's structural under-investment and reliance on bank credit as an existential drag; it now travels under the rebranded "Savings and Investments Union" alongside banking union and the digital euro as pillars of EU financial deepening.
Example
The European Commission first launched CMU in 2015 under Jean-Claude Juncker, with a relaunch action plan in 2020. Progress stalled on national resistance to harmonising insolvency and tax rules. Draghi's September 2024 competitiveness report estimated the EU needed roughly €750–800bn in additional annual investment, citing fragmented capital markets as a core reason European savings — large household financial wealth held in low-yielding deposits — fail to finance domestic innovation, prompting the 2025 "Savings and Investments Union" rebrand.
Frequently asked
- What is the Capital Markets Union?
- The Capital Markets Union (CMU) is an EU initiative to merge fragmented national capital markets into a single integrated market for equity and debt. Launched in 2015, it aims to reduce Europe's heavy reliance on bank lending, ease cross-border investment, and direct household savings into productive risk capital across all member states.
- Why does Capital Markets Union matter now?
- Capital Markets Union matters now because the 2024 Draghi competitiveness report identified fragmented capital markets as a core reason Europe under-invests relative to the US. The EU rebranded the effort as the 'Savings and Investments Union' in 2025, tying it to closing an estimated €750–800bn annual investment gap and financing the green and digital transitions.
- How does Capital Markets Union differ from banking union?
- Capital Markets Union targets market-based finance
Glossary · non-bank intermediation
Non-bank intermediation is credit provision and maturity transformation conducted outside the regulated banking system — by money-market funds, insurers, pension funds, private-credit vehicles, hedge funds and securitisation conduits. It channels savings to borrowers through capital markets rather than deposit-funded bank balance sheets.
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- Why has Capital Markets Union stalled?
- Capital Markets Union has stalled because its hardest components — harmonising insolvency law, securities taxation, and supervision — touch core national sovereignty member states are reluctant to cede. Since 2015 progress has been incremental, leaving European capital markets shallow and home-biased, with savers' wealth concentrated in low-yielding domestic deposits rather than cross-border risk capital.