The FSAP

Promoting the smooth and efficient flow of capital from savings to investment is a policy priority for Governments around the world. An important aspect of this policy agenda is the development of securities markets to facilitate access to capital by issuers.

Within the EU enthusiasm for improving issuers' access to capital is entwined with interest in building a properly integrated pan-European financial market. Such a market, it is believed, will offer a range of benefits including lower capital costs for issuers and better returns for investors that should, if projections are right, impact positively on the real economy.

The Financial Services Action Plan (FSAP) was an attempt by the European Commission to equip the Community better to meet the challenges of monetary union and to capitalise on the potential benefits of a single market in financial services. The FSAP set out a detailed action plan for the adoption by 2005 of legislative measures to support a single, integrated financial market in which a strong securities market was envisaged as a major component.

The FSAP led to extensive change in securities market regulation: new laws; new law-making processes; and more attention to the mechanisms for the supervision of securities market activity and enforcement. With the FSAP nearing completion, it is now a good time to take stock of what has been achieved, and to identify challenges that lie ahead.