Conference on building a capital markets union: challenges and opportunities for business

Date

2015 09 15

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Photo by Džoja Barysaitė

Vilnius, September 15. Today the participants of the high level conference Building a Capital Markets Union: Challenges and Opportunities for Business discussed how to encourage capital markets to better provide financing to businesses, especially SME‘s. They also exchanged views on aspects related to building the Capital Markets Union and the latest trends of the financial markets.

 „Businesses, especially, SME‘s, face the problem of getting access to finance – that is a concern not only in the EU, but globally. This is an obstacle for the further growth of the economy. The Capital Markets Union aims at ensuring alternative methods of financing for business and promotes the diversity of lending instruments thus strengthening competition. Lithuania supports the idea of the Capital Markets Union. Our country has taken steps to ensure that business can borrow from the capital markets already. By encouraging capital investments into business, we stimulate economic growth“, Lithuanian Finance Minister Rimantas Šadžius said. 

The conference was organised by the Ministry of Finance of the Republic of Lithuania and the City of London Corporation. It was attended by the representatives of the European Commission, United Kingdom as well as Lithuanian institutions and businesses.

Apart from direct bank lending, capital markets are the principal mechanism through which potential investors can meet those looking for funding, and provide a range of diversified funding sources for the economy. However, compared to other parts of the world, European businesses remain heavily reliant on banks for funding and relatively less on capital markets. For example, medium-sized companies receive five times more funding from capital markets in the U.S. in comparison with the EU.

The Capital Markets Union aims at creating more successful and competitive EU financial markets, breaking down the barriers for cross-border investments in the EU and improving access to financing for businesses across Europe. The investors are offered the additional options for investing their money thus stimulating growth and jobs. The creation of a Capital Markets Union has been announced as one of the key priorities for the European Commission in its current term. The Commission unveiled Green Paper on the issue in spring 2015 and the Action Plan is expected to following September this year.

Stronger capital markets would complement banks as a source of financing, and would unlock more investment for all companies, especially SME‘s, and for infrastructure projects. Additionally, it would attract more investment into the EU from the rest of the world and make the financial system more stable by opening up a wider range of funding sources.

In order to solve the problems raised by the lack of alternative SME financing instruments, in June 2015 the Ministry of Finance of the Republic of Lithuania, the Ministry of Economy of the Republic of Lithuania and the Bank of Lithuania presented to the Government the proposals on the measures that will provide better access to business (in particular, SME) financing in Lithuania through capital markets. The proposals cover regulation of crowd funding activities, terms and conditions for public offering, criteria for private placement, granting of shares to the employees of companies, and improvement of the regulation of collective investment undertakings (CIUs).

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