Two Central Bank Leaders in Europe Want a Faster EU-Wide Capital Markets Union

On Monday, the French and German central bank governors released a joint statement. According to the joint statement, advancing a financial markets union to fund green and digital transformations is more crucial than ever.

The step has become more urgent and essential as a result of the energy crisis, inflation, and the conflict in Ukraine. This was also in the form of a joint statement issued by the central banks of the two nations.

The Animosity Between the Two

Joachim Nagel and Francois Villeroy de Galhau want to show unity between Paris and Berlin. To do this, a group wrote an opinion piece later printed in Les Echos and Handelsblatt. As a result of the war between Russia and Ukraine, a lack of energy, and increasing costs, there is no animosity between the two cities.

However, Europe is also  at the core of the issue. A joint statement was issued by the Bundesbank and Banque de France presidents. They declared they were writing with a single conviction in the joint statement.

They continued by saying how important yet harder it is to maintain their togetherness. The joint statement says that what is true for all of Europe is, first and foremost, valid for the relationship between France and Germany. It continues by saying that dividing them would doom them.

The Essentiality of The Capital Markets Union (CMU)

France and Germany have postponed their meeting to allow themselves more time to come up with a solution. This is the situation since negotiations between the two nations have been unsuccessful for the last month. For financial stability, they both insisted that the effort known as the capital markets union (CMU) must proceed.

The EU established the CMU in 2015.The CMU was designed to encourage the geographical diversity of finance sources. In addition, the growth of equity capital, which has increased the private sector’s willingness to take on risk, is another driver.

They both agreed that there is an urgent need to accelerate the energy transition and that they thus need the financial support a Green CMU provides. They continued by saying that the bloc has to appeal to both local and foreign investors equally.

Undoubtedly, they said a sprint to the finish line is the completion of the unification of the capital markets. They claim that the appropriate steps are required right now to ensure its success in the future.

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