At a time when different jurisdictions are rapidly advancing, Europe cannot afford to remain on the sidelines. Europe’s savings and capital should be working to fuel European innovation, scale up companies, and finance critical infrastructure. I’m glad to see the EU’s recent reactions, but let’s not forget the Draghi report estimates Europe needs an additional €800 billion in annual investment to regain economic strength. 

Capital markets in Europe remain deeply fragmented. This fragmentation is limiting Europe’s ability to scale up innovation and compete globally. Within over 500 venues, the market capitalization of listed companies in Europe is only around 50% of GDP, compared to about 170% in the US. The EU is home to just 10% of global IPOs. The fundamental issue remains: Europe lacks an integrated, competitive capital market.

A major opportunity lies in mobilizing private capital. However, instead of investing in European opportunities, around €300 billion European savings flow into US markets each year. 

Furthermore, we need to strengthen long-term investments, mainly equity. On the one hand, there is an urgent need to create incentives that encourage retail participation in European capital markets. We need tax incentives related to capital gains and dividends. On the other hand, we need to review the regulatory framework for insurers, pension funds and banks to foster such long-term investments. 

For Europe to compete, the CMU must evolve into a true Savings and Investments Union (SIU). A key issue is the lack of regulatory harmonization across the EU. Post-crisis reforms made the banking sector more resilient, but in doing so, they created a system that is overly complex and excessively risk averse. 

This is why the EU should focus on the following issues:

First, EU regulation and supervision being a barrier. To fully harness banks’ potential, it is time for targeted and tailored refinement of the regulatory and supervisory approaches, that should focus on the sector’s ability to finance growth, in parallel with continuing to deliver on financial stability. A good example is securitization, which will be reviewed by the European Commission. Reducing capital and liquidity requirements for banks, and for insurers as investors, along with simplifying transparency and due diligence requirements, would help revitalize this critical funding channel.

Second, financial stability remains a core pillar of any investment strategy, and this is where Europe’s Banking Union must be strengthened. The lack of a European Deposit Insurance Scheme (EDIS) remains one of the most significant sources of fragmentation in the financial system. Without a mutualized safety net, depositors and investors perceive risks differently across Member States, leading to inefficiencies in capital allocation. Completing the Banking Union with a robust EDIS and a liquidity-in-resolution framework would reinforce financial stability and enhance market confidence. It is positive that it will be included under the SIU.

Finally, Europe must also recognize many European banks, and companies, operate in third countries with distinct economic and regulatory environments. But European regulations often fail to account for these differences, imposing unnecessary constraints on banks operating abroad. Local regulations that align with Ba-sel standards should be respected, ensuring that European banks remain competitive in global markets.

I remain optimistic and hopeful, but Europe needs a bold, comprehensive strategy to strengthen its financial markets, mobilize private capital, and create a more dynamic investment ecosystem. This means reducing regulatory fragmentation, easing market access, and fostering an environment where innovation and investment can thrive. A well-functioning SIU, supported by a competitive Banking Union and a revitalized securitization market, would provide the foundation for long-term growth.

If Europe wants to remain a place where companies can scale, where savers see real opportunities, and where financial markets support economic dynamism, policymakers must act decisively. The EU has the capital, the talent, and the potential to compete on the global stage. What it needs now is the political will to remove barriers and build a financial system that truly works for growth.