The capital markets union can contribute to the recovery by providing deep, liquid, integrated capital markets. One of the most difficult battles will be reducing the differences between national insolvency frameworks. The Commission and member states agreed on an action plan in late 2020 to give a fresh push to the market integration drive. The action plan aimed at making funding more accessible to European companies and support more long-term equity financing, while making the EU an even safer place for individuals to save and invest long-term. Progress toward a more harmonized framework of national insolvency laws has been highlighted as one of the main outstanding issues by EU officials and experts.
The Eurogroup identified “efficient” insolvency frameworks as an important instrument for facilitating adjustment processes in the region back in 2016. By speeding-up the process to wind down companies, banks can get rid faster of the bad loans weighing down their balance sheets, improving financial stability. Given their importance, the Eurogroup pointed out in February the need to strengthen the insolvency frameworks, “in order to ensure swift and effective action and minimize economic fallout in the aftermath of the COVID-19 crisis”. the Commission noted that “national insolvency regimes across the EU differ in their design and in their practical implementation” and there is no even a common definition of insolvency. The EU executive is determined to progress on the capital markets union project because “large, integrated capital markets are essential to deliver our key economic policy objectives”, including building a more resilient economy after the pandemic and completing the twin green and digital transitions.