How can NextGenerationEU stimulate the European Capital Markets Union?

Details

Supervisors

Candelon, Bertrand

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion, à finalité spécialisée

Abstract

In 2020 the world was facing a heavy economic downturn because of the covid-19 pandemic and all its consequences for the people and the businesses. To boost the economic and social recovery the EU commission proposed a very ambitious “NextGenerationEU” (NGEU) recovery plan of 807 billion € with an unprecedented financing based on EU bonds and bills. The purpose of this study is to evaluate how the recovery plan and its innovative financing can stimulate the Capital Markets Union (CMU). The covid crisis pointed out the emergency to progress into this initiative of creating a single EU capital market launched in 2015. We use in this report the new 2020 CMU objectives to develop a composite indicator to visualize the general Capital Markets Union’s progress based on 11 indicators. Our results show that the Capital Market Union progressed by 84% in comparison with 2015. The green and digital finance stimulated by NGEU are the main drivers of this progress. In addition, our study reveals that the EU ambition in “NextGenerationEU” for a “fairer, greener and more digital Europe” stimulates the access to financing, the financial integration within EU and the development of permanent safe assets. These elements contribute to the progress towards the Capital Markets Union. The future composite indicator update will show the CMU future progress and the impact of each of its components. Furthermore, it will allow to evaluate the real future benefit of the “NextGenerationEU” and the “2020 CMU action plan” on the EU Capital Markets Union.