The European Commission is proposing a European Savings and Investments Union (SIU) to integrate banking and capital markets. This it to build on the Capital Markets Union (CMU) and Banking Union (BU). The idea seems simple: mobilize private savings into equity investments and support strategic EU objectives, including better savings opportunities, fostering capital for innovation, digital finance, financial sector competitiveness, and sustainable finance.
Need for coordination among Member States
Having made limited progress with two CMU action plans (2015, 2020) and steps toward the BU (since 2012), the Commission plans to present a comprehensive strategy for SIU within the next few months. While the European Parliament supports the initiative, Member States have yet to agree on key measures. Since many necessary actions fall under national jurisdiction, the Commission will assist and encourage Member States to implement reforms and coordinate efforts.
What does the initiative aim to achieve and how
The SIU aims to boost EU’s economic competitiveness through several key measures:
- Mobilizing savings more effectively by encouraging retail investment in capital markets through simple, low-cost products and potential tax incentives.
- Increasing investment availability for EU companies, particularly for startups and innovative firms, by directing private and institutional funding towards them.
- Enhancing capital market integration and efficiency by eliminating barriers to cross-border investments, including supervisory, tax, and licensing obstacles.
- Strengthening the supervisory framework to ensure high-quality supervision and consistent application of financial regulations across the EU.
The SIU is thus designed to enable deeper and more efficient financial markets, thereby promoting economic growth and stability.
What the plan for an SIU is silent on: Debt capital markets and securitisation
Securitisations are at the top of the CMU agenda, but the SIU plan is silent on this so far. Instead, the focus is more on equity, innovation financing and the targeted redirection of private savings.
In view of the development of new business models, the emphasis on equity is obvious. However, debt capital – especially through asset-based finance and securitisation – is also indispensable for scaling them. In the coming months, stakeholders should push for both areas of financing to be considered and promoted together.