LONDON, May 17 (Reuters) - Brexit has forced the European Union to rethink its flagship capital markets union (CMU) project by broadening its supervisory and geographical reach, a draft EU document showed on Wednesday.
London is the bloc's biggest financial market by far but it will be outside the EU from 2019.
The departure of the largest financial centre from the single market makes it necessary to re-assess how the CMU can ensure the businesses in the bloc have access to strong capital markets, the document written by the European Commission and seen by Reuters said.
"This calls for stronger actions, more effective supervision and making sure that the benefits of the CMU are felt across the entire EU," they said.
"The City of London has traditionally pooled liquidity and provided risk management services for the rest of the EU. The departure of the UK from the single market reinforces the need and urgency of further developing and integrating EU capital markets."
A "deep re-engineering" of the financial system is necessary and this "implies finding ways to integrate sustainability into the EU's regulatory and financial policy framework", and to broaden the "geographical reach of capital markets". (Reporting by Huw Jones; Editing by Mark Potter)