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Vierteljahrsheft zur Wirtschaftsforschung: „EU Capital Markets Union: an alluring opportunity or a blind alley? The macro-perspective: CMU and risk-sharing“

Report of November 10, 2017

Fostering cross-country risk-sharing via capital markets is a central macroeconomic objective of the Capital Markets Union. Risk-sharing means that individuals, firms or public-sector authorities, located in a region or country suffering from a temporary and idiosyncratic economic shock, would be able to compensate the regional output gap (i. e., lack of aggregate demand, increasing unemployment and pressure on wages) via income arising from financial claims on the output of unaffected member states within the European Monetary Union (and within the European Union). Likewise, difficulties in access to funds for households or firms in a crisis country would be mitigated as sources in the financial markets of partner countries, unconstrained by the umbilical nexus to ‘their’ state, might be tapped. Of course, such complete risk sharing is not achievable; neither in a bank-based nor in a market-based financial system. However, the CMU action plan is expected to enable European Union member states to make substantial steps in this direction. In the light of these high expectations, the question arises: Does the CMU action plan set the appropriate priorities and can it ultimately deliver, that is: Is the risk sharing potential suggested in the plan realistic? The authors of the VJH on the macro-perspective of the Capital Markets Union provide an assessment of the risk-sharing potential and derive policy recommendations for ways of improving the CMU project. 

Content of issue 02.2017 (PDF, 1.25 MB)

  • Hans-Helmut Kotz and Dorothea Schäfer
    EU Capital Markets Union: an alluring opportunity or a blind alley? The macro-perspective: CMU and risk-sharing

  • Andreas Breitenfellner and Helene Schuberth
    Europe needs more than a Capital Markets Union—focus on the integration of euro area sovereign debt markets

  • Jürgen Schaaf
    Does EMU require CMU?

  • Hans-Helmut Kotz, Willi Semmler and Ibrahim Tahri
    Capital Markets Union and monetary policy performance: comes financial market variety at a cost

  • Jan Friedrich and Matthias Thiemann
    Capital Markets Union: the need for common laws and common supervision

  • Paolo D'Imperio and Waltraud Schelkle
    What difference would a Capital Markets Union make for risk-sharing in the EU?

  • Hans-Helmut Kotz and Dorothea Schäfer
    Can the Capital Markets Union deliver?

Vierteljahrshefte zur Wirtschaftsforschung 02.2017 | 86. Jahrgang