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Europe’s Untapped Capital Market: Rethinking integration after the great financial crisis

Valiante, Diego, (2016), “Europe’s Untapped Capital Market: Rethinking integration after the great financial crisis”, Final Report of the European Capital Markets Experts Group, Ceps, February

In the aftermath of the great financial crisis, the lack of risk diversification in the European financial system, i.e. limited cross-border banking and capital markets activities, is the main cause of the fast retrenchment of capital flows within national boundaries. Europe needs private risk sharing mechanisms to withstand asymmetric shocks, such as the recent financial crisis. An EU-wide action to promote competition among national capital markets could free up to €1.8 trillion in cash and deposits to invest cross-border in more profitable and riskier projects to create growth and jobs.

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