European Financial Market Oversight Regulation
The Capital Markets Union (CMU) and the Banking Union, while both initiatives of the European Union, serve distinct purposes and operate independently of each other.
The CMU, unlike the Banking Union and the European Central Bank's direct supervision of large banks, focuses on the capital markets. Its primary objective is to create a single market for capital, facilitating access for small businesses to financing on capital markets. Additionally, the CMU aims to improve the quality and quantity of information provided to investors, particularly retail investors.
In contrast, the Banking Union is a union aimed at ensuring stability, safety, and reliability in the Eurozone banking sector. It was established to oversee the largest banks in the Eurozone, with the European Central Bank (ECB) taking over direct supervision in November 2014. The Banking Union also includes the single resolution mechanism (SRM), which enables the future resolution of non-viable systemically important banks involving the ECB, the European Commission, and member states.
All Eurozone member states are part of the Banking Union, while non-Eurozone member states can join by entering into close cooperation with the ECB. The EU has comprehensively revised its financial market regulation in response to the 2008/2009 financial crisis, and the SRM was established in 2014 to strengthen financial institutions and create a framework for the resolution and winding-down of failing banks.
The European System of Financial Supervision (ESFS) was established in 2011 to achieve improved and uniform oversight of the European financial and banking sector. It includes three European Supervisory Authorities (ESAs), the European Systemic Risk Board (ESRB), and national authorities.
It's important to note that the CMU does not appear to be directly connected with the Banking Union, the ESFS, the ECB, the SRM, or the comprehensive revision of financial market regulation. Furthermore, the CMU does not seem to pertain to the supervision of banks or the resolution and winding-down of failing banks, unlike the Banking Union and the single resolution mechanism (SRM).
The CMU does, however, have a connection with the EU's efforts to align financial flows with objectives of a greener, fairer, and more inclusive economy and society. This is evident in the European Commission's Action Plan for Financing Sustainable Growth, adopted in March 2018.
In summary, while the Banking Union and the CMU share the goal of strengthening the European financial sector, they operate in different spheres, with the Banking Union focusing on the banking sector and the CMU on the capital markets. The CMU's goal is to create a single market for capital, improving access for small businesses and providing better information to investors, while the Banking Union aims to ensure stability, safety, and reliability in the Eurozone banking sector.
