Advancing towards deeper integration of European capital markets
AFME, the Association for Financial Markets in Europe, has published a new report on the progress of the Savings and Investment Union (SIU), highlighting that, in a more uncertain geopolitical environment and with growing strategic investment needs, Europe requires deeper, more integrated, and more competitive capital markets to sustain its economic and political weight. The SIU represents an opportunity to close the competitive gap with the United States and the United Kingdom, which currently limits both the ability of European companies to finance themselves efficiently and citizens’ access to attractive investment products. Although progress has been moderate, initiatives such as the review of the securitization framework, the pan-European savings and investment accounts, and actions on financial education reflect a renewed political commitment. Nevertheless, the report underscores that Europe must move decisively toward simplifying its regulatory framework to turn this momentum into tangible results.
Key findings of the report
- Time is running out to move “further and faster”: Europe continues to lag.
According to the report, despite the political momentum that has repositioned the Capital Markets Union towards a broader Savings and Investments Union (SIU), with a wide range of new proposals and a renewed strategy to activate European savings and channel them into productive investment, the EU continues to show only modest progress and a clear competitiveness gap compared with the US and the UK. This is reflected in:
- a reduced ability for corporates and households to access attractive market-based finance.
- shallower and less liquid capital markets; persistent fragmentation across Member States with negative implications for economic growth.
- A structural shift in corporate financing: the rise of private markets.
The report describes a profound transformation in the funding landscape: IPO activity remains subdued despite high equity valuations and low volatility. High-growth firms,including unicorns, are staying private for longer:
- in 2016, 70% went public within four years.
- by 2025, 90% of unicorns created in 2021 remain private.Private markets
Private equity, private credit, business angels and crowdfunding, have grown from representing 8% of total market-based funding in 2014 to 20% in 2024. Private markets are no longer a transitional step but an established alternative to public markets.
- • Strength in bond financing and chronic weakness in equity financing.
Indicators in the report show that market-based finance rose slightly to 13% of total corporate financing, driven by record bond issuance due to tightening spreads, while IPO activity fell by 23%, reaching its lowest level in more than a decade. This mismatch reflects deeper structural challenges in Europe’s equity ecosystem.
- Households: an underused lever to boost market liquidity.
The report highlights a crucial insight: European households hold substantial savings, but these remain under-mobilised. The concept that equity market liquidity also depends on retail investors—not only institutional pools of capital—is central to the SIU. Strengthening household participation in capital markets is essential for improving liquidity and deepening markets.
- Technology: European leadership in DLT bonds but lagging in tokenisation and stablecoins.
- The report reveals a dual-speed technological landscape: The EU and Switzerland lead DLT-based bond issuance, with over 50% of global volumes.
- The US leads in tokenisation of assets (funds, ABS, private credit) and dominates the stablecoin market, accounting for 99.8% of global supply.In AFME’s view, the EU could unlock this potential by advancing decisively on post-trading integration, a key bottleneck identified for scaling digital finance.
Filter results
According to AFME, a clearer, more coherent, and proportionate regulatory environment, without unnecessary layers and focuses on growth and competitiveness, is keyl to increase investor confidence, unlock private capital and deepen European capital markets
According to the Center for the Governance of Change at IE University, Europeans support technological progress if it reinforces security, inclusion, and social welfare; but resist it when change feels imposed, opaque, or misaligned with their values.
According to a recent report released by CEPS, European financial regulators should adopt competitiveness as a formal secondary objective, following the precedent established by the UK's Financial Services and Markets Act 2023.
According to the OECD. SMEs and start-ups that grow rapidly contribute significantly to job creation, economic growth and competitiveness. Indeed, SMEs that grow by one-third over a three-year period, contribute about as much to job creation as large firms.
According to @McKinsey, banks must prepare for a new growth curve. Strategic precision —the ability to combine technology, capital discipline, and deep customer insight— will distinguish the leaders from the laggards.
According to Kristalina Georgeva IMF Managing Director, lifting growth requires three things: one, regulatory housecleaning to unleash private enterprise; two, deeper regional integration; and three, preparedness to harness AI.
According to The European House – Ambrosetti, the European Union has an opportunity to boost competitiveness and growth by simplifying regulatory and supervisory frameworks, particularly in the areas of sustainability and the financial sector.
According to Ramón Casilda Béjar, Spain, in today’s complex geopolitical landscape, has the opportunity to strengthen its role as a bridge and connecting country between Ibero-America and the European Union, revitalizing investment flows in both directions.
According to @ECB, in moments of acute stress, the public often turns to physical currency as a reliable store of value and a resilient means of payment, underscoring the crucial role it plays above and beyond everyday transactional convenience
According to Juan S. Mora-Sanguinetti, in Spain a 10% increase in regulatory volume leads to a 0.5% drop in employment in companies with fewer than 10 employees.
According to Hélène Rey “In a world where stablecoins, particularly those pegged to the dollar, become an important global payment tool, we must brace ourselves for substantial consequences”.
@judith_arnal proposes reforms for the EU to advance regulatory simplification, starting with consensus on its meaning, with competitiveness as a pillar, plus coordination mechanisms and a governance rethink.