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By Maria Demertzis
The EU will need 600 billion additional net investments every year from now to 2050 to meet its climate objectives. It also needs strategic investments to digitalise its economies, increase resilience, defend its borders and deal with the increasingly frequent “once-in-a-lifetime” shocks it faces.
Those who will finance these investments must be able to take on high levels of risk. That’s why the EU needs to turn to capital markets that can deal with such risks better than any other financial intermediary. Therefore, a Capital Markets Union (CMU) in the EU remains a necessary ingredient to deal with its future financing needs. But despite all the efforts by the European Commission to nudge its creation through legislative proposals, there is little shift in the way that the EU financial system works.
The CMU has always been a rather complex project because many policy authorities need to talk to each other and coordinate their actions. It is also not an easy one to sell to wide constituencies precisely because there are so many that are involved with varying degrees of resistance to change.
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