Capital Markets Union in Europe with fully integrated capital markets across member countries can only work when the status of member country sovereign bonds as risk-free assets is restored. Banking Union and fiscal union are both required for this outcome. However, the Banking Union remains an unfinished project without a European deposit insurance framework and there is little consensus at the moment for a fiscal union in the Euro Area. It appears thus that the fate of the Capital Markets Union solely rests with the European Central Bank in the near to medium term.
Steffen, Sascha and Viral V. Acharya (2016), Capital Markets Union in Europe: Why Other Unions Must Lead the Way, Download