European capital markets are expanding and are anticipated to play some main role in the global arena. An incorporated European capital market is being tried to be created by the European Union and in the Financial Services Action Plan, the rationale is taken account of. By procuring their share in the international capital markets, the European capital markets, at present are kicking in sufficient contest to the American counterparts. The securities market is represented by the capital market which sequentially is linked with the national economy. There are twenty-seven countries, in case of the European capital market, which are associated to the expansion of the European capital market. Though the field is led by the US capital market presently, but in the global capital markets, a good position is projected to be made by the Eurozone very soon. Globally, Europe is the second largest economy if it is considered unitedly. In the world, the largest exporter is the European Union and it is operating as largest trading partner of a number of countries. (www. finance.mapsofworld.com)
The creation of a European capital market reduces the distortions in competition between European companies by the existence of different conditions of funding in each national market. In an integrated economic zone as the EEC, where the free flow products and the possibility of transfer of labor tend to equalize prices and costs, the compartmentalization of financial markets, linked to the maintenance of controls on capital movements implies a less competitive firms have to bear in the country of origin, financial charges proportionately higher than those that support competing firms operating in other countries. In this context, in fact, only larger companies can circumvent these limitations and address the external financial markets where the operation is more advantageous.
Liberalization of capital movements instead ensure leveling the cost of financing in all economic systems and, in particular, help to reduce the disadvantage suffered by smaller companies, able to finance exclusively on the domestic market as compared to multinational companies or, more generally, more complex business organization.
The strategy of global approach of the EU as an international actor has not changed the importance of Europe in the world economic market and in other interactions. The EU is the area of the world with the largest internal market in terms of gross product and the largest actor in world trade. The European import-export rate is higher ...