How efficient is the German capital market? This question is addressed in the white paper “Strategies for the sustainable financing of Germany's future”, which Deutsche Börse published today. The results underline the urgent need for a national action plan to strengthen the German, as well as the European, capital market. In addition, the white paper provides concrete recommendations for the cornerstones of such an action plan.

Germany is facing enormous challenges: digitalisation, climate neutrality, a pension system that is fair to all generations. These issues must be the focal points for the new government. The necessary financial resources to master these topics are immense; at the same time, public budgets are heavily burdened by the Corona crisis. Private investment and private wealth creation will be decisive success factors in the future. The capital market therefore has to play a key role on the way to a sustainable and successful future.

Thomas Book, Member of the Executive Board of Deutsche Börse AG, says: “Today, the German capital market is not in the best possible position. That is why we urgently need a holistic, national capital market strategy that is supported by actors from politics, business, and society. With our study, we would like to provide an impetus for this. We must use all our potential to lead our society and economy into a sustainable and successful future.”

The white paper was co-authored by economist Prof. Dr. Wolfgang Bessler from the University of Hamburg. The specific recommendations of the white paper target three areas:

1. Facilitating equity-based corporate and innovation financing through:

• A capital market-oriented reform of company law and, in particular, more flexibility for start-up companies
• Better tax conditions for equity financing, especially for innovative start-up companies

2. Strengthening the competitiveness of the capital market through:

• More flexible legal and regulatory frameworks for IPOs, especially for small and medium-sized enterprises.
• Allowing shares with multiple voting rights according to international standards
• Strengthening transparent pricing and reducing fragmentation in the secondary market and regulated exchanges supporting IPOs
• Unify European framework and implement Capital Markets Union proposals

3. Enabling participation in economic success through:

• Reducing and eliminating tax disadvantages for direct and indirect share ownership
• Strengthening private asset accumulation and private old-age provision with shares
• Increasing the share quota among institutional investors through targeted promotion measures
• Strengthening economic education and political support for a culture of long-term equity investment in Germany

The full version of the white paper is only available in German.