A spectre is haunting Europe: the European Capital Markets Union. For years, it has been a constant topic in the soap-box oratory of many financial politicians. But little progress is being made. Here an EU prospectus directive that could hardly motivate an IPO, there a label that failed to revitalize the securitization market. The capital market in Europe was and still is highly fragmented. This is particularly regrettable in that the EU – despite all the difficulties in growing together politically – has succeeded comparatively well in organizing common markets in the past. But not for capital.

Against this backdrop, the political slogan of the Capital Markets Union has almost become an expression of failure. And yet, recently at their euro summit, Europe's heads of state and government once again adopted a kind of manifesto for the Capital Markets Union. How the hell does that fit together?

Well, the heads of government are assuming that the starting position has now changed and that progress should finally be made. And this confidence is well-founded. After all, the pressure to act has increased for everyone involved. All national governments in Europe have recognized that huge sums of money are needed for the sustainable restructuring of the economy and the expansion of a digital infrastructure. Even those who are unsure about capital markets and still do not trust financial market players 16 years after Lehman Brothers realize this. However, they agree that these sums can only be raised by mobilizing private capital on financial markets.

In addition, there is a huge financing requirement for military capability. In short, this is no longer just a theoretical debate about the interplay between bank loans and capital market financing. It is about prosperity and security. It's down to the nitty-gritty.

The latest statements by German Chancellor Olaf Scholz show that politicians now attach a prominent role to the Capital Markets Union. It is remarkable that Scholz, a Social Democrat, has spoken out in favour of „a modern supply-side policy“. It is equally remarkable that he describes the Capital Markets Union as a „decisive resource for future growth“.

However, the fact that the chances of real progress towards a common European capital market have recently brightened considerably is also due to the fact that the translation „from rhetoric to specifics“ has been successful. Eurogroup leader Paschal Donohoe has managed to get the 20 eurozone governments to agree on a list of very specific measures. Of particular importance is the attempt to revive the securitization market by taking up the core demands of investors and banks and tackling the risk weighting of securitizations and transparency obligations. At the same time, there is new hope that there will be some harmonization of insolvency law requirements.

Following the urgent requests made by ministers and heads of government to the EU Commission, draft legislation is almost certainly to be expected in the course of the year that will initiate significant changes to EU regulations for the markets. This means that the „completion“ of the Capital Markets Union is at least getting underway – even if the process will certainly take years.

In the Council and the EU Parliament, there have recently been several examples of the EU being able to organize consensus or at least sufficient majorities to make progress even on controversial dossiers. This willingness and ability is, if you like, Europe's political capital. There is much to suggest that the EU will use it this year to leverage Europe's financial capital more effectively. After years of just waffling on, the Capital Markets Union finally has a real chance of being implemented.