The Importance of a Banking Union and Fiscal Union for a Capital Markets Union

Viral Acharya and Sascha Steffen

No 62, European Economy - Discussion Papers from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: Government bond markets in the Euro Area are highly fragmented causing further fragmentation in bond and equity markets. Capital Markets Union with fully integrated capital markets across member countries can only work when the status of member country sovereign bonds as risk-free assets is restored. Banking Union and fiscal union are both required for this outcome. However, the Banking Union remains an unfinished project without a European deposit insurance framework and there is little consensus at the moment for a fiscal union in the Euro Area. It appears thus that the fate of the Capital Markets Union solely rests with the European Central Bank in the near to medium term.

JEL-codes: G01 G21 G28 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2017-07
New Economics Papers: this item is included in nep-eec
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:euf:dispap:062

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