The Commission renews its efforts to harmonise capital market rules in response to Europe’s investment challenges, as identified by Draghi.
The European Commission published a communication on its strategy for the Savings and Investments Union (SIU), an initiative aimed at improving the efficiency of the EU financial system by channelling citizens’ savings into productive investments. The strategy is designed to foster individual wealth while simultaneously driving economic growth and boosting the EU’s global competitiveness.
The SIU wants to address Europe’s investment challenges, as highlighted in the Draghi report (see SwissCore article), which estimated that the EU needs an additional €750-800 billion in investment per year by 2030. Much of this funding is crucial for small and medium-sized enterprises (SMEs) and innovative start-ups, which cannot rely solely on bank financing. Currently, around €10 trillion in household savings are held in bank deposits, which provide security and liquidity but often yield low returns. The European Central Bank (ECB) estimates that if European households invested like their American counterparts, up to €8 trillion could flow into market investments, an additional €350 billion annually for the productive economy. Thus, by reallocating a portion of these deposits into capital markets, the SIU aims to bridge the gap between savings and investment needs, ensuring that capital is effectively used to support economic growth. More investments in capital markets enables European companies to grow and thrive, which in turn creates better jobs with competitive salaries, driving investment and growth across key sectors such as technological innovation, decarbonisation and security.
To achieve these objectives, the SIU requires collaboration across four strands: 1) Citizens and Savings, 2) Investment and Financing, 3) Integration and Scale and 4) Efficient Supervision in the Single Market. Under ‘Citizens and Savings’, a key action is to allow citizens easy and low-cost access to investment opportunities, implying the need to improve financial literacy as also underlined in the Union of Skills (see SwissCore article). The next key measures implementing the SIU in Q3 and Q4 of 2025 include encouraging retail participation in capital markets and developing the supplementary pension sector under the first strand. Proposed policy measures under ‘Investment and Financing’ include the Commission working with the EIB Group and private investors to deploy the planned scale-up TechEU investment programme, initially introduced in the Competitiveness Compass. The third strand, ‘Integration and Scale’, will address the current EU-wide issue of fragmented markets. EU capital markets remain divided, preventing financial entities from fully leveraging the benefits of the single market due to inconsistent or duplicative regulations across Member States. The SIU aims to tackle these challenges by proposing an ambitious legislative package to eliminate barriers in trading and to remove obstacles to cross-border distribution of investment funds. Lastly, the ‘Efficient Supervision in the Single Market’ focuses on creating a level playing field across the EUby achieving a more unified supervision of capital markets, including the transfer of certain tasks to the EU level.Overall, the SIU strategy draws on progress made under the two Capital Markets Union (CMU) Action Plans and parallel efforts to develop the Banking Union. What differs the SIU from previous CMU efforts is that it takes a more holistic approach and is more citizen-focused, seeking to enable citizens to better save for retirement, buying a home or supporting children’s education.
Invest Europe published a reaction to the SIU strategy and fully supports its ambitious goals and acknowledges the critical role of private equity, venture capital and infrastructure financing in Europe’s future. However, they believe the SIU lacks sufficient measures to encourage banks to become better long-term equity investors and call for swift action to implement concrete measures. Digital Europe welcomed the Commission’s commitment to boosting venture capital investments, particularly to support the development of innovative technologies. The European Council agrees that a SIU will help channel additional investment to the European economy and in the European Council meeting on 20 March 2025, EU leaders called on the Commission to complete the capital markets integration and take decisive steps.
The Commission has highlighted the SIU as a key enabler in the Competitiveness Compass (see SwissCore article) and of the Clean Industrial Deal, as well has mobilising private capital for defence as part of the ReArm Europe Plan. The European Commission plans to roll out the SIU strategy in stages over the coming years, prioritising measures that will most impact competitiveness. An interim evaluation will be published in Q2 2027 to assess the progress and impact on European economic financing. The Commission emphasised that the success of the initiative depends on collaboration between EU institutions, Member States and the private sector to create a more integrated and efficient financial system. It remains to be seen whether the SIU strategy will gain acceptance among Member States, particularly as previous efforts to integrate the EU’s fragmented capital markets have stalled due to resistance from member states reluctant to accept central supervision. The proposed strategy may raise concerns about European supervisory system in capital markets that is too centralised.