The committee said in a resolution this week that they want CMU building blocks, such as diverse investment choices, risk mitigation and clear investment information across the EU, to be in place by 2018 to complement bank financing.
Non-bank sources of finance should be developed alongside well-established bank financing. EU businesses will be less vulnerable in the event of tighter bank lending if market participants are able to raise debt, equity and venture capital directly from the market, it said.
Effective cross-border insolvency rules will be needed along with a recovery and resolution framework for non-banks, especially 'central counterparties' who work as intermediaries between sellers and buyers and manage the risk in case one party defaults, the committee said.
Quality, easily comparable financial information should be available on companies looking for crowd funding or peer-to-peer lending, and more education is needed for SMEs and retail investors to help them avoid risky investments, it said.
SME-friendly regulations and procedures are needed. Member states should, for example, review their rules on equity financing to make sure they are not "too burdensome", the committee said.
Likewise, changes to financial rules should aim to remove barriers for smaller companies, improving access to finance through "various instruments" to suit what is a highly diverse part of the market, it said.
The committee stressed that CMU legislation and financial market standardisation must be launched in all member states if it is to help capital flows across the EU.
The CMU is designed to help businesses across all 28 EU member states tap into "diverse sources of capital". The Commission began a consultation on the project in February.
"The Capital Markets Union aims to break down the barriers that are blocking cross-border investments in the EU and preventing businesses from getting access to finance," it said at the time. "If EU venture capital markets were as deep as the US, as much as €90 billion ($102 billion) more in funds would have been available to companies between 2008 and 2013," it said.
At the time the consultation was launched, the Commission sought views from European Parliament, national parliaments, EU citizens, SMEs, the financial sector and others. The consultation closed on 13 May and the summary of responses will be published at a later stage along with the Action plan in September 2015, according to the Commission.
The Confederation of British Industry (CBI) said last month that British businesses back the aims of the CMU.
"The EU seems to have the right approach with the Capital Markets Union initiative," said Marte Borhaug, the CBI's head of financial services.
"Boosting the availability of capital financing for firms will help propel growth across Europe. It’s now important that this approach becomes the reality - the CMU should be primarily about fostering cooperation among businesses and members states," Borhaug said.