Category: Research

Feasible Steps to Finance Innovation in Europe

IEP@BU

Six Proposals to Strengthen EU Capital Markets

A Report by a Bocconi-IEP Reflection Group chaired by Ignazio Angeloni

Read on IEP@BU >>

Executive Summary  

This report, prepared by a Reflection Group convened by the Institute for European Policymaking at Bocconi University comprising representatives from a broad range of financial institutions and other experts, proposes a two-pronged strategy to improve the functioning of European capital markets. Its aim is to contribute to the plans being developed by the European Commission to launch a Savings and Investment Union (SIU). 

The report builds on two premises. First, past efforts to launch a Capital Markets Union (CMU) have not reached the desired results partly because they combined broadly agreeable concrete steps to enhance market efficiency and ambitious wide-ranging institutional reforms which, no matter what their rationale might have been, could not gather sufficient consensus. This report builds on the pragmatic assumption that these two elements must be separated: feasible actions to achieve concrete results must come first. A second premise is that today, more than when CMU was originally conceived, the overriding priority is to unblock the financing of innovative European enterprises with high growth and productivity potential. The rest of the design is more easily implemented gradually at a later time. 

Accordingly, the report puts forth six proposals aimed at improving the flow of savings to young, innovative enterprises. 

  1. Introducing new individual savings instruments incentivising risk capital investment by individuals with tax advantages, simple investor-friendly schemes, and flexible choice of legal jurisdiction; 
  1. Introducing new defined-contribution voluntary retirement instruments for individuals and employers with tax and regulatory advantages, portability and dynamic risk profiles; 
  1. Launching a new euro-wide IPO instrument offering scale-up companies the full range of pre- and post-IPO services, broad access to EU savings pools and the best available post-trading services; 
  1. Removing cross-border obstacles to securities custodians with generalised use of T2S, free access to post-trading locations and mobility and interoperability among post-trading platforms; 
  1. Setting-up an innovation-friendly securitisation environment by means of a more market-friendly regulatory treatment and a new private market-making structure, with EIB-EIF support; 
  1. Enhancing the EIB Group’s role by facilitating its access to EU savings pools and by having it act as a strategic anchor investor in support of the new securitisation platform. 

The six proposals are meant to complement each other and would be most effective if implemented in combination. However, they would also benefit if enacted partially, in a few countries only and involving a group of large wide-reaching financial institutions.  

In the second part, the report sketches the contours of broader reforms to complete the design of EU capital markets, which could also be implemented in steps. 

In particular, it lists principles that should guide the design of a 28th optional legal regime for companies and securities markets and the further gradual transition of supervisory responsibilities to an EU-wide market supervisor. Finally, the report suggests ways to enhance the EU online informational and financial education platforms. 

While this report was readied for publication, the EU Commission published a comprehensive legislative proposal aimed at enhancing market integration as part of its Savings and Investments Union program. An outline of these proposals and a comparison with those made here are contained in Section 2 of this report. 

US digital asset strategy and the European response

IN-DEPTH ANALYSIS
Requested by the ECON committee Monetary Dialogue Papers, June 2025

Available here >>

AUTHORS

 Ignazio ANGELONI, Cédric TILLE 

Abstract

We discuss the possible effects of the US administration’s Digital Assets Strategy (DAS), on the US and Europe. If pursued consistently over time, DAS would tend to weaken the Fed’s payments oversight and monetary control mechanisms, with possible adverse consequences including for the dollar’s international role. Europe’s monetary sovereignty is unlikely to be affected. To ensure that it is indeed the case, the EU crypto markets regulation (MiCA) and the euro’s legal tender status may need strengthening. While wholesale CBDCs would benefit the cross-border payment infrastructure, the digital euro in itself would not contribute significantly to protecting Europe’s monetary sovereignty.

This document was provided by the Economic Governance and EMU Scrutiny Unit at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 23 June 2025.

Unpredictable Tariffs by the US: Implications for the euro area and its monetary policy

STUDY
Requested by the ECON committee
Monetary Dialogue Papers, March 2025

AUTHORS

Cinzia ALCIDI (CEPS), Ignazio ANGELONI (IEP Bocconi and SAFE), Cédric TILLE (Geneva Graduate Institute of International and Development Studies)

Abstract

Were the US to impose large and lasting tariffs on its imports from the EU, the effect on the euro area (EA) would be substantial and far-reaching. We expect the direct impact to be inflationary in the US and contractionary on EA aggregate demand and output. The indirect impact through an appreciation of the dollar (partly already occurred) tends to transfer inflation from the US to Europe. The ECB should be mindful that both deflationary and inflationary influences may ensue, and be ready to adjust monetary policy promptly if necessary to maintain price stability. This document was provided by the Economic Governance and EMU Scrutiny Unit at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 20 March 2025.

CEPS_IA_US Protectionism – FINALDownload

Assessing the ECB’s monetary policy stance by comparing tightening cycles

Prepared for the European Parliament’s Committee on Economic and Monetary Affairs.

IN-DEPTH ANALYSIS

Requested by the ECON committee

Monetary Dialogue Papers, November 2024

In this paper, the ECB monetary policy stance is assessed by comparing the recent tightening cycle (2022-today) with the two preceding ones, which took place in 2000-2001 and in 2006-2008. Interest rates, quantitative indicators and monetary conditions indices (MCIs) are used for this purpose. The main finding is that at the peak of the latest tightening cycle, the ECB monetary policy stance was no more restrictive than it was at the peak of the two preceding ones; actually, probably less. This contrasts with the fact that in the more recent case inflation was higher and more persistent than in the two earlier episodes.

Assessing the ECB monetary policy stance by comparing tightening cycles – Ignazio ANGELONI

Can Banking Union foster market integration, and what lessons does that hold for capital markets union?

Requested by the ECON committee

In-Depth Analysis 

Requested by the ECON committee

Ignazio ANGELONI , Rainer HASELMANN , Florian HEIDER , Loriana PELIZZON, Jonas SCHLEGEL , Tobias H. TRÖGER

Over the past decade, Banking Union (BU) regulators focused on making banks safer, resulting in stronger banks but limited euro area cross-border integration. To attain the strong and integrated financial system Europe needs going forward, BU authorities must now broaden their focus, promoting cross-border banking by removing legislative barriers that prevent or discourage it. That goal requires reducing overbanking and limiting the national authorities’ regulatory power further. It also necessitates a Capital Markets Union (CMU) under a unified supervisory control. We argue that BU and CMU are complements in a strong and integrated European financial system, and that a successful launch of CMU presupposes progress towards an integrated BU.

Available here >>

The Next Goal: euro area banking integration

Prepared for the European Parliament’s Committee on Economic and Monetary Affairs.

In-Depth Analysis

Prepared for the European Parliament’s Committee on Economic and Monetary Affairs.

In its first ten years (2014-2023), the banking union was successful in its prudential agenda but failed spectacularly in its underlying objective: establishing a single banking market in the euro area. This goal is now more important than ever, and easier to attain than at any time in the last decade. To make progress, crossborder banks should receive a specific treatment within general banking union legislation. Suggestions are made on how to make such regulatory carve-out effective and legally sound.

Available here >>