LONDON (Reuters) - The European Union’s efforts to create a capital market to rival the United States have made little headway and the project needs a new push to remove barriers that hamper progress, bankers said on Friday.

European Union flags fly outside the European Commission headquarters in Brussels, Belgium, April 10, 2019. REUTERS/Yves Herman

The capital markets union or CMU seeks to encourage companies to raise money by issuing stocks and bonds, rather than continuing to raise loans from EU banks, some of which are still struggling to recover from the 2008 financial crisis.

The CMU, launched in 2015, has been a central plank of the current European Commission’s mandate that ends in the summer. But after a reset of the project in 2017 and adoption of 11 new EU laws, most companies in Europe still get their money from banks.

This contrasts with the United States where companies tap financial markets instead, which have greater capacity to spread risk more evenly across the economy.

“We need a new push to reinforce the use of financial markets by companies in Europe,” said Giovanni Sabatini, chairman of the European Banking Federation’s executive committee.

“It is clear though that the European CMU project needs a reset. The fundamental and structural obstacles that stand in the way of an integrated Capital Markets Union need to be identified and removed,” Sabatini said.

Barriers to a seamless cross-border capital market include differences in national tax and insolvency laws, a vested interests of some market participants in heading off competition, and duplication of services.

AFME, another banking lobby, said on Thursday that efforts to boost securitization, a fundraising mechanism that is one of the CMU’s core objectives, have made little ground.

Brussels has sought to use Brexit to kickstart the CMU, warning that London, the region’s biggest financial center used by companies across Europe to raise money, will be outside the bloc.

“CMU in general is a journey and we have not yet arrived,” Marc Bayle, director general for market infrastructure at the European Central Bank, told an AFME conference this week.

Werner Frey, a managing director of AFME, told the same event that only the public sector could remove many of the remaining barriers to the cheaper financial plumbing that a CMU needs.

The CMU so far is probably a “failure”, Frey said.

Analysts say more fundamental change is needed to make CMU a success, such as restoring public trust in markets after the global financial crisis a decade ago ushered in austerity.