The basic principle of the free movement of capital goes back to the Treaty of Rome 5 and has enjoyed the same status as the other fundamental freedoms since the Maastricht Treaty. I think it is time that we consider what regulatory and institutional adjustments have become necessary since then so that we can take full advantage of the single capital market. Turning first to the regulatory dimension, let’s stick with our example of the entrepreneur in Osnabrück. If his company wishes to issue a bond in the Netherlands, it will agree with the investor whether the transaction is to be carried out under German or Dutch law. This initially sounds like a relatively simple way to conduct cross-border financial transactions despite divergent national legislation. However, financial transactions are often far more complex than that. There might be an entire chain of financial intermediaries, meaning that it is not clear for the final buyer what his/her legal claims and property rights are. The account holder’s legal position from the moment a security is posted to his/her account varies substantially. In some countries, the account holder has full and undivided ownership. In other countries, he/she has an “inferior” legal position, i.e. he/she holds an indirect interest in a property or just a claim against the account provider. At the turn of this century, a group of financial market experts, led by Alberto Giovannini, developed a number of suggestions as to how greater harmonisation in the EU financial markets could be achieved.

In isolation, higher carbon prices could carry the risk of households facing higher prices, without being able to switch their consumption expenditures towards greener technologies. Strong public and private investment efforts are therefore needed to prevent consumers from being locked into carbon-intensive technologies. Public investments can serve a catalytic function in this context. Infrastructure investments, for example for charging electric vehicles, can trigger wide-ranging changes in the type of energy mix used in public and private transport. The coronavirus crisis offers a must-seize opportunity. The costs of letting the current crisis go to waste would be exceptionally large, for two main reasons. First, business dynamism in Europe has been comparatively weak for a long time (see figure 3). There are considerably lower shares of both growing and shrinking firms than in other advanced economies, holding back productivity growth as well as technology creation and diffusion. [6] Put simply, new firms are more likely to adopt new and greener technologies, and we are not seeing enough of them in Europe. Figure 3 New business creations (thousands)  Notes: Number of new businesses created outside of agriculture (FR, DE, IT, ES), and number of business applications outside of agriculture (US), 12-months rolling average. Data for France excludes sole proprietorships. US data has been transformed from weekly to monthly, data for Italy from quarterly to monthly and data for Spain from annual to monthly. Data for Spain available only until 2018. Sources: INSEE (FR), Destatis (DE), Banca d'Italia (IT), Census Bureau (US) and INE (ES).