The European Commission has published its action plan for implementing the capital markets union (CMU), a key pillar of Commission President Jean-Claude Juncker's investment plan.
The main goal of the project, according to Jonathan Hill, European financial stability, financial services and capital markets union Commissioner, is to "knock down barriers to make it easier for capital to flow freely across all 28 member states."
The action plan consists of 33 measures and legislative initiatives that will form the building blocks of a CMU which will be completed by 2019.
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It has generated a positive response from MEPs and leading figures in finance.
Roberto Gualtieri, chair of the European Parliament's committee on economic and monetary affairs (ECON), welcomed the move, saying, "Parliament is committed to the successful implementation of this key initiative."
He highlighted the need to make sure "resources available in Europe are put to work for the benefit of investment in the real economy and especially for SMEs."
SMEs represent 99 per cent of businesses in the EU and have created 85 per cent of new jobs in the region over the past five years. They were particularly hard-hit by the 2007 financial crisis as their access to credit - something vital to their success - dried up.
According to Gualtieri, creating the CMU will "enhance the financial system's resilience against the adverse effects of severe financial crises," specifically protecting SMEs from future financial shocks.
Burkhard Balz, a member of European Parliament's centre-right European People's Party and co-author of Parliament's resolution on building a CMU, reiterated these sentiments, saying, "the main goal of the planned CMU is to help finance the real economy, in particular small and medium-sized enterprises."
He emphasised the need to work fast, explaining that, "the desired results will not be reached if we act at a snail's pace," and to focus on "better connecting the financing of investment projects across the EU, making capital markets stable and increasing competition."
Anthony Browne, chief executive of the British Bankers' Association (BBA), said the banking sector was "strongly supportive" of the plans, adding, "progress towards 2019 must be both visible and measurable, which is why the clear building blocks and deadlines set out today are a huge step in the right direction."
The Confederation of British Industry (CBI) also welcomed the move calling it "a shot in the arm to growth and jobs across Europe."
Matthew Fell, CBI's director for competitive markets, said, "the EU CMU can play an important role in connecting growing businesses with the finance they need to invest, scale-up and export."
Key early actions announced in the plan include new rules on securitisation – the process where a financial instrument is created by pooling assets for investors to purchase - new rules on solvency treatment of infrastructure projects and public consultations on venture capital and covered bonds.