Legal Mechanism of EU Capital Markets Union: Will Free Capital Flow Provided?

Keywords: European Union, internal market, control, legal mechanism, EU Capital Markets Union, capital flow, financial integration

Abstract

The article examines the historical, economic and legal aspects of the evolution of free of capital flow in the European Union, contemporary stage of ensuring that was the construction of the Capital Markets Union. The authors identify the correlation between ensuring the freedom of capital movement and control mechanisms for such flow, defining the legal means of EU institutions aimed at establishing an appropriate balance in its legal regulation. The authors characterize the features of the construction and functioning of the Capital Markets Union, touch upon the organizational and legal mechanism herein, and also explore the correlation of the Capital Markets Union with other projects of European financial integration development (Economic and Monetary Union, Single Market in Financial Services and European Banking Union). In this regard, special attention is paid to the European Financial Supervision System, mainly to the European supervisory authorities, which unites various financial integration projects. In addition, the authors draw focus to the correlation between the method of harmonization and the method of unification in the implementation of further steps by EU institutions in the field of financial integration. To achieve the research goal, two groups of research ways and means were used: general research ones (methods of cognition, description, analysis, induction, deduction, comparison) and special methods of study (formal legal, comparative legal, structural legal, historical methods). As a result of the analysis, the authors conclude that the construction of a Capital Markets Union makes it possible to ensure the reliable implementation of the free capital flow under the European Union jurisdiction in the long term. The creation and functioning of the Capital Markets Union is a complicated process indeed, as it correlates with other financial integration projects within the European Union, including contributing to the construction of a single integrated financial market. At the same time, a striking feature of such financial integration is the gradual transition from the harmonization method to the unification method, which allows for the establishment of uniform regulatory rules on specific issues for all member states, which strengthens the role of supranational regulation of European Union financial markets and supervision of them by European supervisory authorities.

Author Biographies

Mikhail Evdokimov, BCS Company

Candidate of Sciences (Law)

Rustam Kasyanov, Moscow State Institute of International Relations (MGIMO University)

Doctor of Sciences (Law), Professor

References

Alberto A. (1993) The political economy of capital controls. NBEK Working Paper, vol. 4353, pp. 1-37.

Barnard C. (2020) European Union. Oxford: University Press, 1032 p. DOI: https://doi.org/10.1093/he/9780198855750.001.0001

Bavoso V. (2018) Capital markets, debt finance and the EU Capital Markets Union: a law and finance critique. SSRN Electronic Journal, vol. 5, pp. 1-37. DOI: https://doi.org/10.2139/ssrn.2990669

Black J. (2017) The law of money and financial services in the European community. Oxford: University Press, 585 p.

Bradlow D., Hunter D. (2010) International financial institutions and international law. N.Y.: Wolters Kluwer, 404 p.

Brännström L. (2014) Law, objectives of government, and regimes of truth: Foucault's understanding of law and the transformation of the law of the EU internal market. Foucault Studies, pp. 173-194. DOI: https://doi.org/10.22439/fs.v0i18.4658

Crotty J. (1999) A defense of capital controls in light of the Asian Financial crisis. Journal of Economic Issues, vol. 33, pp. 427-433. DOI: https://doi.org/10.1080/00213624.1999.11506174

Dani M. (2019) The jurisdiction and role of national constitutional courts in the process of European integration: an introduction. Diritto Pubblico Comparato ed Europeo, vol. 21, pp. 715-735.

Dourado A.P. (2017) The EU free movement of capital and third countries: recent developments. Intertax, vol. 45, pp. 192-204. DOI: https://doi.org/10.54648/TAXI2017016

Fromage D. (2022) Soft law and multilevel cooperation as sources of (new) constitutional challenges in EU economic and monetary integration: introduction to the special issue. Journal of Banking Regulation, vol. 23, pp. 1-6. DOI: https://doi.org/10.1057/s41261-021-00172-2

Goodman J. (1993) The obsolescence of capital controls? Economic Management in an Age of Global Markets. World Politics, vol. 46, pp. 50-82. DOI: https://doi.org/10.2307/2950666

Haerter N. (2020) Ceci n'est pas un Capital Markets Union: re-establishing EU-led financialization. Competition and Change, vol. 24, pp. 248-267. DOI: https://doi.org/10.1177/1024529420915627

Hartley T. (2014) The foundations of European Union law. Oxford: University Press, 503 p. DOI: https://doi.org/10.1093/he/9780199681457.001.0001

Iglesias-Rodríguez P. (2021) ESMA as a residual lawmaker: the political economy and constitutionality of ESMA's product intervention measures on complex financial products. European Business Organization Law Review, vol. 22, pages 627-671. DOI: https://doi.org/10.1007/s40804-021-00218-y

Karapetov A.G. (2016) Economic analysis of law. Moscow: Statute, 528 p. (in Russ.)

Kosov M. et al. (2021) Cryptocurrency: technologies and prospects. Webology, vol. 18, special issue, pp. 233-247. DOI: https://doi.org/10.14704/WEB/V18SI05/WEB18226

Krieger A.M. (2017) The alleged legal consequences of the UK's withdrawal from the EU on the market of derivative financial instruments. Mezhdunarodnoe pravo i mezhdunarodnye organizacii=International Law and International Bodies, no. 4, pp. 37-45 (in Russ.)

Kuznetsova S.A. (2013) On definition of legal mechanism concept. Vestnik Sankt-Peterburgskogo universiteta MVD Rossii=Bulletin of Saint Petersburg University of the Internal Ministry, vol. 57, no. 1, pp. 9-12 (in Russ.)

Lang J. (1965) The right of establishment of companies and free movement of capital in the European Economic Community. Champlain: University of Illinois Law Forum, pp. 3-23.

Méndez-Pinedo E. (2009) EC and EEA law: a comparative study of the effectiveness of European law. Groningen: European Law Publishing, 341 p.

Mwenda K. (2006) Legal aspects of financial services regulation and the concept of a unified regulator. Washington: World Bank Publications, 161 p. DOI: https://doi.org/10.1596/978-0-8213-6459-8

Osokina E.B. (2017) Legal aspects of the creating European Banking Union. Moskovskiy zhurnal mezhdunarodnogo prava=Moscow Journal of International Law, no. 4, pp. 131-140 (in Russ.)

Rodrik D. (1998) Who needs capital-account convertibility? Essays in International Finance, vol. 207, pp. 1-16.

Steber M. (2022) The importance of the fundamental freedoms of the EU for the tax law of Germany and the EU. Pravo. Zhurnal Vysshey shkoly ekonomiki=Law. Journal of the Higher School of Economics, no. 2, pp. 216-243 (in Russ.)

Stiglitz J. (2000) Capital market liberalization, economic growth, and instability. World Development, vol. 28, pp. 1075-1086. DOI: https://doi.org/10.1016/S0305-750X(00)00006-1

Weiss F., Kaupa C. (2014) European Union internal market law. Cambridge: University Press, 314 p. DOI: https://doi.org/10.1017/CBO9781107785366

Williamson J. (2009) A short history of the Washington consensus. Law and Business Review of the Americas, vol. 15, pp. 7-23.

Zvonova E.A. (2020) European financial integration: from banking services market to the Union of Capital Markets. Bankovskoye parvo=Banking Law, no. 3, pp. 67-73 (in Russ.)

Published
2023-03-28
How to Cite
EvdokimovM., & KasyanovR. (2023). Legal Mechanism of EU Capital Markets Union: Will Free Capital Flow Provided?. Law Journal of the Higher School of Economics, 16(3), 221-244. https://doi.org/10.17323/2072-8166.2023.3.221.244
Section
Law in the Modern World