The leaders who created the European Union hoped that binding together their economies would increase prosperity and reduce the chance of conflict. But the union is far from complete, especially in the financial sector.

Last week, European officials proposed uniting their capital markets to make it easier for businesses and individuals to invest and borrow money across the 28 countries that make up the union, something that has been made difficult by differing national laws and regulations. The European Commission, the executive branch of the E.U., outlined strong goals that would, for example, make it simpler for German savers to invest in mutual funds that own stocks across Europe or for Italian corporations to sell bonds to French insurance companies. But European officials have not yet outlined a detailed plan to achieve this.

A well-regulated capital markets union would take years to create but could provide a boost to the struggling European economy by reducing the cost of borrowing money, especially for small and medium-size businesses, and providing savers with greater investment opportunities. Combining Europe’s stock and bond markets would also reduce the reliance on banks, many of which have not yet recovered from bad investments and loans made before the financial crisis.

To realize these benefits and to protect against another crisis, European officials should create new regulatory agencies, or use existing ones, to issue and enforce strong financial rules in coordination with national agencies. They will have to guard against efforts by special interests to use the creation of a capital markets union to roll back sensible European and national regulations that were put in place in response to the global financial crisis. They should also create a common approach to resolving defaults and bankruptcies, so borrowers and lenders have confidence that they will be treated the same regardless of where they are based.