In an article published in Cinco Días, Juan Blasco, Head of Institutional Business at BBVA CIB and Board Member of the Association for Financial Markets in Europe (AFME), examines the role of the Savings and Investments Union (SIU) as a key lever to channel European savings into productive investment, deepen capital markets, and strengthen Europe’s competitiveness and growth potential.
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The coming decade will be decisive for Europe. The energy transition, the technological revolution, digitalisation, defence and industrial modernisation will require an unprecedented investment effort. The good news is that Europe is not starting from scratch: it has competitive companies, outstanding talent, one of the highest levels of savings in the world and strong appeal for international investors. The real challenge now is to transform these strengths into a greater capacity to finance growth.
The investment needs are enormous. Achieving Europe’s competitiveness, innovation and economic transition objectives will require mobilising private capital on a scale that can hardly be sustained through public or bank financing alone. As highlighted by the reports of Enrico Letta and Mario Draghi, the challenge is not a lack of savings, but the ability to transform those savings into productive investment and growth. The question is no longer simply how to mobilise European savings, but how to make Europe one of the world’s most attractive destinations for investment.
In an environment where capital is increasingly global, competition is no longer confined to companies or sectors; jurisdictions also compete. The most developed markets offer depth, liquidity, legal certainty and a predictable regulatory framework, factors that reduce the cost of capital and accelerate the flow of investment into the real economy. Capital seeks opportunity, but it also seeks confidence.
TheSavings and Investment Union (SIU) is no longer merely a financial policy agenda. It is an economic policy in the broadest sense of the term: a necessary condition for strengthening competitiveness, fostering innovation, enhancing strategic autonomy and increasing Europe’s ability to attract the capital that will finance its future growth. Ensuring that a greater share of European savings is channelled into European projects does not mean restricting the free movement of capital. It means creating the conditions that make investing in Europe as attractive for domestic savings as it is for international capital. Regulation alone, however, will not be enough: the success of the SIU will also depend on the ability of industry and institutions to translate this framework into solutions that mobilise investment.
“The success of the SIU will also depend on the ability of industry and institutions to translate this framework into solutions that mobilise investment”
The direction is clear and there is growing consensus on the need to move forward. The time has now come to turn ambition into results. It is time to move from theory to action.
Achieving this will require further progress in regulatory integration and the development of a genuine single capital market. This also means simplifying the regulatory framework wherever possible. Simplification does not mean less regulation, but better regulation: eliminating duplication, reducing unnecessary complexity and providing the market with a more coherent, proportionate and predictable framework, while preserving financial stability and investor protection.
Bank financing has historically been one of the strengths of the European economy and will continue to play an essential role, but it will need to be complemented by deeper and more liquid capital markets. In this model, banks and institutional investors (investment funds, insurers and financial sponsors)are complementary players. The origination and structuring capabilities of financial institutions must be combined with the resources managed by these long-term investors, reinforcing the role of banks as the link between savings and the real economy.
It will also be essential to foster financial innovation that enables savings and investment to be connected more efficiently. Instruments such as securitisation help optimise banks’ balance sheet usage, preserve their capacity to extend new credit and broaden the universe of assets available to investors. An appropriate regulatory framework will support the development of this market without compromising the high standards of resilience achieved in Europe.
Alongside market reform, a genuine Savings and Investment Union must also bring citizens into the equation. Promoting financial education from an early age and fostering a stronger culture of long-term investing will enable more people to participate in capital markets in an informed and responsible way, strengthening their future financial well-beingwhile contributing to the financing of Europe’s growth.
Europe has before it a decisive opportunity: to channel its savings towards the productive economy, strengthen the financial literacy of its citizens and attract the international capital needed to compete in an increasingly demanding global environment. The roadmap is clear. The task now is to turn savings into investment, ambition into scale and consensus into action. Europe has the capital, the talent and the capabilities it needs. If it can harness them in the service of a shared vision, it will not only finance its growth,it will strengthen its capacity to shape its own future.
- Finance
- Financial regulations
- Investment bank
