Dáil Éireann Debate, Tuesday - 23 June 2015
215. Deputy Dara Calleary asked the Minister for Finance his views on the potential of the EU capital markets union to enable small and medium sized enterprises to have increased access to a variety of sources of capital funding; and if he will make a statement on the matter. [24753/15]
View answerSecuring more funding for the real economy is an important objective of the Capital Markets Union (CMU) initiative, which will run from 2015 to 2019. CMU, through a wide ranging series of measures, aims to make EU capital markets more integrated, liquid and competitive.
Its ultimate purpose is to increase resilience of the financial system and provide greater opportunities for SMEs, particularly high growth SMEs, and longer term infrastructure projects.
From an Irish perspective CMU could serve to significantly increase issuer and investor access to more liquid European markets and, in so doing, enable our companies to expand and create employment.
The development of CMU is considered to offer good potential for fast growth SMEs, some of whom have been constrained in recent years due to lack of funding from traditional funding sources. Ireland's particular focus will be on what the Capital Markets Union can do for SMEs and for smaller markets.
In its green paper on the Capital Markets Union, the Commission identified a number of goals which it feels should be prioritised in the short term. These include bringing forward a proposal on "Simple, Transparent and Standardised Securitisation" and a review of the Prospectus Directive. The Department supports these short term priorities of the CMU initiative as they have the potential to benefit SMEs directly and indirectly.
A potential benefit to revitalising securitisation markets is that it may free up bank balance sheets to enable more lending to SMEs.
A review of the Prospectus Directive has the potential to encourage smaller issuances by establishing more proportionate rules.
One of the key priorities of the CMU project is to develop alternative modes of funding. A number of initiatives have been suggested including:
- Crowd-funding, which offers good potential to make a meaningful contribution to the financing needs of SMEs. We would support the EU playing a role to develop this sector, for example in conducting research on best practice. We believe that enhancing the potential contribution of crowd-funding would complement the range of measures already undertaken at a domestic level aimed at supporting SMEs.
- Developing the quality of SME credit information has the potential to further the funding opportunities available to SMEs. If SMEs are to become attractive propostions to investors it is necessary that there is good quality and comparable information available on them and I welcome the signal in the European Commission's Green Paper that there will be something done in this area.
- SME growth markets provide a valuable platform for SMEs to source funding as the administrative demands and costs are far lower than they would be for admission to trading on a regulated market.
The Commission is scheduled to publish an action plan in September 2015 in which it will set out the legislative proposals or market led initiatives it intends to pursue in the short and long term to advance the CMU initiative. The Government will continue in its active engagement as these proposals take shape, to ensure that the interests of SMEs remain embedded within the CMU initiative.
