30, sets out both the actions needed to build the cmu and a calendar for their implementation. short - term actions range from ( i ) a legislative proposal to develop simple and transparent securitisation, possibly subject to favourable prudential treatment, through ( ii ) a revision of the capital requirements on investments in infrastructure for insurance companies, to ( iii ) the simplification of the prospectus directive ( so as to facilitate listing for firms, especially smes ). consultations have been launched on cross - border investments in venture capital as well as on covered bonds, retail financial services and the impact of financial regulatory reforms. these are all steps that go in the right direction, and we look forward to having them implemented in a timely manner. but the challenges are tougher over the longer term. let me highlight what i think are the key policy directions and then i will move to the important topic of investment in infrastructures. first, it is essential that more risk capital flows to firms that want to innovate and grow in size. equity financing is best suited for higher risk and innovative projects, that display strong information asymmetries and mostly translate into intangible assets ; the low availability or lack of tangible assets to offer as collateral for debt finance is a serious issue, especially for start - up firms. equity can be raised through individual investors, venture capital or private equity funds, or, when a company matures, listing on a stock exchange. private equity or venture capital financiers also provide managerial expertise and deeper knowledge of innovative sectors. going public makes it easier to raise additional equity, reduces the cost of capital, enhances the discipline of firms ’ management and allows shareholders to sell their shares more easily. in the european union, while the overall share of ( listed and unlisted ) equity on firms ’ liabilities is broadly comparable to that in the united states, only one third of this equity is accounted for by listed shares compared with slightly more than half in the us. as for venture capital, it represents a negligible share of firms ’ external finance, much lower than in the united states. firms ’ capital bases can be strengthened by pursuing a more neutral tax treatment of equity compared to debt, through, for example, an allowance for equity in corporate income tax. such allowances could be strengthened for firms that list their shares on stock exchanges. equity financing can also be supported by tax incentives, targeted for instance to innovative firms or venture capital

while sovereign credit risk premia in the euro area have, over the last three years, been substantially retraced, european capital markets as a whole remain relatively underdeveloped and fragmented. the importance of pursuing better integration of european financial markets has been emphasised in the report on financing business investment recently delivered to the french prime minister by a task force led by francois villeroy de galhau. out of the 10 proposed policy recommendations, only 3 are targeted at the french context, while the other 7 call for european and international action. as a result of the political push towards more diversified and integrated national financial systems, going forward, capital markets and non - bank financial institutions will have to take on a larger role in corporate financing in europe and remaining obstacles to cross - border investments will have to be overcome. the banking union and the capital markets union should complement each other. i have often underscored the fact that the benefits expected from the cmu can be magnified by exploiting the complementarities between bank financing and market financing. to begin with, banks can reinforce their central role in the financial system if they prove able to accompany the shift of part of the intermediation process from them to the markets by expanding their activity in the field of services and assisting firms in direct capital raising. secondly, high quality securitisation, one of the cmu ’ s short - term priorities, can effectively blend the banks ’ comparative advantage in screening and monitoring borrowers with market funding, allowing banks to free up regulatory capital, increase their lending and manage credit risks more efficiently. in the same vein, broadening funding sources for firms provides benefits also to banks. better access to non - bank financing, notably equity capital, improves firms ’ financial structure, supports innovation and makes them more creditworthy, thus safeguarding banks ’ balance sheets and avoiding vicious firm - bank loops. this is not to deny that the cmu can put pressure on banks. by enlarging the pool of financial instruments available to households, the cmu creates incentives to allocate savings out of bank deposits ; it may also contribute to narrow banks ’ margins on loans to households and firms, to the extent that borrowers gain access to a larger set of alternative financing solutions. bis central bankers ’ speeches 2. the challenges of the capital markets union the cmu is ambitious and prioritisation is the key to advancing it effectively. the action plan on building a cmu, presented by the commission on september