Capital markets union:"ever closer union" for the EU financial system

A period of stability might have been expected following the epochal crisis-era reforms to financial system governance in the EU. Instead, however, the EU is preoccupied with a new reform agenda – the Capital Markets Union (CMU) project. This article assesses whether the CMU project is likely to achieve the market transformation it seeks, how institutional factors are likely to shape the CMU project, and how it might change regulatory and supervisory governance for the EU financial system. It suggests that a complex feedback loop is likely to develop between single market and euro area interests with respect to CMU, and that the CMU project may consequently signal whether EU financial system governance is on a path to convergence or divergence. The CMU project may also reveal the extent of the impact of the European Council’s February 2016 New Settlement for the UK within the EU on EU financial governance.