The Capital Markets Union and the elusive goal of a ‛genuine' Economic and Monetary Union

The objective of a European EMU of stable prices, open markets, shared prosperity, employment and sustainable growth was defined in a Summit meeting of 1969, and has been actively pursued as a primary goal of the Union ever since. Significant results have been achieved, but the 5 Presidents’ Report (5PR) of June 2015 frankly admits that a ‛genuine’ EMU remains an unaccomplished endeavour: divergences create fragilities for the whole Union which must be rapidly corrected. A critical analysis of the results so far recorded in the euro zone comes also from other recent documents of the ECB and the IMF. The 5 Presidents indicate a roadmap covering the next decade to ensure a genuine EMU: they argue that progress must be simultaneously made towards economic, financial, fiscal and political union. All Unions are mutually interdependent and must develop in parallel. Financial Union, which comprises the launching and achievement of a Capital Markets Union (CMU), receives specific attention. The aim of this paper is to offer a critical assessment of the Report, in the analytical framework of a system-wide perspective on financial and economic stability offered by the macro prudential policy approach. Purposely, the quantitative evidence presented to illustrate the shortcomings of the EMU building process so far comes exclusively from official documents/papers of the ECB, the EC and the IMF. The “traverse” to the 4-Union EMU is especially complex partly because it goes beyond economic analysis and policy. The crucial role of CMU requires clarification, also in terms of the legal approach to be adopted. More generally, the intertwining of economic policies and the role of fallacies of composition/division must be analytically developed. The 5PR requires detailed specification of these medium-term processes to become operational and to achieve its declared goals.