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Mr. Ashok Vir Bhatia, Ms. Srobona Mitra, Mr. Shekhar Aiyar, Luiza Antoun de Almeida, Cristina Cuervo, Mr. Andre O Santos, and Tryggvi Gudmundsson

their own shares, hybrid securities, or debt to their depositors, a practice known as “self-placement”—in some countries, many small savers were told such products were as safe as bank deposits. Another example is funds claiming to be actively managed, and charging high fees, when they are merely tracking an index—ESMA estimates that as many as 5–15 percent of UCITS equity funds may be “closet indexers” ( ESMA 2016 ). 60. The ESAs are guided by a unified set of EU capital market rules, the so-called single rulebook . Level 1 measures comprise EU directives and

Mr. Ashok Vir Bhatia, Ms. Srobona Mitra, Mr. Shekhar Aiyar, Luiza Antoun de Almeida, Cristina Cuervo, Mr. Andre O Santos, and Tryggvi Gudmundsson
This note weighs the merits of a capital market union (CMU) for Europe, identifies major obstacles in its path, and recommends a set of carefully targeted policy actions. European capital markets are relatively small, resulting in strong bank-dependence, and are split sharply along national lines. Results include an uneven playing field in terms of corporate funding costs, the rationing out of collateral-constrained firms, and limited shock absorption. The benefits of integration center on expanding financial choice, ultimately to support capital formation and resilience. Capital market development and integration would support a healthy diversity in European finance. Proceeding methodically, the note identifies three key barriers to greater capital market integration in Europe: transparency, regulatory quality, and insolvency practices. Based on these findings, the note urges three policy priorities, focused on the three barriers. There is no roadblock—such steps should prove feasible without a new grand bargain.
Mr. Ashok Vir Bhatia, Ms. Srobona Mitra, Mr. Shekhar Aiyar, Luiza Antoun de Almeida, Cristina Cuervo, Mr. Andre O Santos, and Tryggvi Gudmundsson
International Monetary Fund. Monetary and Capital Markets Department
This technical note considers the regulation and supervision of the market-based finance (MBF) sector in Ireland. The Irish MBF sector is dominated by investment funds (IFs), including money market funds (MMFs), while special purpose entities (SPEs) continue to represent a sizeable proportion of assets. Reflecting Ireland’s position more broadly as an open and internationally oriented economy, the MBF sector generally holds non-Irish assets on behalf of non-Irish investors, although domestic interlinkages exist primarily through property funds. This combination makes the sector important from a financial stability perspective both within Ireland and globally, and underlines the importance of robust regulatory oversight and a strategic approach to managing the interaction of domestic and international financial stability objectives.
International Monetary Fund. Monetary and Capital Markets Department

Markets Authority (ESMA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Banking Authority (EBA)—foster harmonized practices. ESMA has played an increasingly important role in the regulation and supervision of capital markets in the EU in recent years and is responsible for direct supervision of credit rating agencies, trade repositories, securitization repositories and third country central counterparties. 25. The ESAs are guided by a unified set of EU capital market rules, the so-called single rulebook . This rulebook comprises