The Capital Markets Union (CMU) project is still “not in the oven” - these were the words of José María Roldán, the President of the Spanish Banking Association (AEB), when opening AFME’s 11th Spanish Capital Markets Conference in Madrid on February 13.

Roldán was one of many speakers to acknowledge that the CMU has not fulfilled its potential and further work is required to advance the European project. First introduced five years ago, the CMU project is still yet to see significant progress; as much as 88% of European funding comes from banks rather than Capital Markets.

Pablo Hernández de Cos, Governor of the Bank of Spain, in his keynote address acknowledged the need to reinforce the European financial union amid growing industry risks and challenges.

These risks include factors such as the deterioration in the global and euro growth outlook, as well as new challenges such as climate and technology risk.

He also said the recent departure of the UK from the European Union has made progressing the CMU even more relevant. This is due to the need to accommodate the loss of the City of London and the important role it plays in financial services for the EU.

At the conference it was also discussed how further investment could be attracted to Spain over the next decade.

On a panel chaired by Editor in Chief of Bolsamania, Eduardo Segovia, it was agreed that it was too early to tell what impact the new Spanish coalition government would have on the markets; so far there had been no obvious immediate effect.

However, Victor Rodríguez Quejido, Director General of Strategy and International Affairs at the Spanish National Securities Markets Commission (CNMV) said this outlook could depend on the government’s stance on Brexit and the impact this could have on market fragmentation.

Rob Ford, Founding Partner and Portfolio Manager at TwentyFour Asset Management, added that the new government’s decision-making could potentially be hampered by coalition, and the lack of a clear majority.

All panellists, despite the lack of certainty over the implications of Spain’s new coalition government, agreed that regulatory harmonisation and tax incentives would be key tools for attracting further investment in Spain and progressing the CMU.

These were among the issues highlighted by José Manuel González-Paramo, Executive Board Director and Chief Officer of Global Economics and Public Affairs at BBVA. In his keynote address, he said the key to progressing the CMU would be harmonising rules in areas such as insolvency and tax, as well as harnessing technology change across the continent in areas such as blockchain.

This was echoed by a call-to-arms by David Wright, Chair of EUROFI and Partner at Flint-Global, emphasising more strongly the need for a political ex-ante agreement and timetable to commit European authorities to the CMU project.

It was clear from various interventions at the conference that if Europe does not commit more strongly to the CMU project soon, it is likely that five years from now, industry participants will be having the same conversation about how the CMU is not fulfilling its potential.