Strengthening the European capital market: a pathway to global competitiveness

In the face of geopolitical uncertainties, sluggish economic growth and constrained monetary and fiscal policies, possible measures to strengthen the overall European competitiveness are widely discussed. The European capital market plays a key role in ensuring that the described ambition that Europe remains “a place where growth and innovation can continue to be fostered”. How this can be achieved has been discussed in our Whitepaper.??

First and foremost, the EU needs to develop its Capital Markets Union (CMU) into a dynamic, prosperous and transformative Savings and Investments Union (SIU). This evolution is essential to ensure economic growth and strengthen the EU's global role. By harmonising and simplifying regulations, reducing market fragmentation and (national) barriers, mobilising private capital, fostering a private data economy and strengthening the EU clearing and post-trading ecosystem, the EU can promote a more dynamic and competitive capital market that supports sustainable economic growth.?

Unlocking financial potential for economic growth, innovation and participation?

A key measure to strengthen the European capital market and its competitiveness is to reduce fragmentation and increase transparency. With over 500 trading venues and a high level of dark trading, the EU's market structure is the most fragmented among developed countries. Simplifying regulation, harmonising listing requirements and strengthening the IPO ecosystem are essential steps. By facilitating access to equity markets for SMEs and institutional investors, and by improving pre-IPO financing, the EU can increase market liquidity and attract more global investors.?

In addition, the EU must foster a global competitive private data economy by encouraging innovation and investment in data-driven business models and infrastructures, while acknowledging the commercial value of data as cornerstone of a competitive sector.??

Mobilising private savings by encouraging more retail participation is another key component. With more than €33 trillion held in currency and deposits across the EU, there is a huge untapped resource that could be directed into productive investments – increasing growth and prosperity in the EU. The introduction of new saving and investment accounts, supported by targeted tax incentives, could channel these funds into the capital markets. This approach not only strengthens the financial ecosystem but also ensures a transparent and diversified investment environment for citizens allowing them to participate in value creation and private retirement savings.?

Leveraging the EU’s clearing and post-trade ecosystem?

To strengthen the EU’s position as a global financial centre, the EU should enhance the global competitiveness of it clearing ecosystem and the role of its independent central counterparties (CCPs), while reducing overreliance on third-country CCPs. Furthermore, various barriers for the provision of effective cross-border post-trade services – including varying regulatory frameworks, distinct tax systems, differences in market practices, etc. – need to be reduced.??

By addressing these areas, the EU can build an integrated and globally competitive capital market that promotes economic growth and participation, ensures resilience and contributes to the EU’s strategic autonomy.?