A new Savings and Investments Union, announced by the European Commission, will offer EU citizens broader access to capital markets and better financing options for companies.
The Savings and Investments Union (SIU) is an important initiative to improve the way the EU financial system channels savings to productive investments, says the Commission.
“Europeans are some of the best savers in the world, but many of their savings are sitting in low-yield deposit accounts,” said EU Financial Services Commissioner Maria Luís Albuquerque: “At the same time, Europe is struggling to meet its investment needs. With the SIU, we can create a virtuous cycle for the benefit of both citizens and companies, helping Europeans get a better return on their hard-earned savings, while bringing substantial investment into the economy.”
The recent Draghi report estimated at an additional €750-800 billion per year would be needed by 2030 for Europe to be able address current challenges such as climate change, rapid technological shifts and new geopolitical dynamics.
Much of the additional investment needs relate to small and medium sized enterprises (SMEs) and innovative companies, which cannot rely solely on bank financing. By developing integrated capital markets – alongside an integrated banking system – the SIU can effectively connect savings and investment needs.
More investments in capital markets support the real economy by enabling companies across Europe to grow and thrive, says thye EU executive. This can create better jobs with more competitive salaries for European workers, and drive investment and growth across all economic sectors – especially in areas that the EU has identified as strategically important, such as technological innovation, decarbonisation and security.
Delivering the SIU is a shared responsibility of EU institutions, Member States and all key stakeholders, requiring concerted efforts and close collaboration across four strands of work:
- Citizens and Savings: Retail savers already play a central role in financing the EU economy via bank deposits, but they should have the opportunity, if they wish, to hold more of their savings in higher-yielding capital-market instruments including in view of retirement.
- Investment and Financing: To stimulate investments, and in particular those in critical sectors, the Commission will introduce initiatives aimed at improving capital availability and access for all businesses, including small and medium enterprises.
- Integration and Scale: Reducing inefficiencies stemming from fragmentation will entail important efforts to remove any regulatory or supervisory barriers to cross-border operations of market infrastructures, asset management and distribution of funds. This will enable businesses to scale efficiently across the EU.
- Efficient Supervision in the Single Market: The Commission will propose measures to ensure all financial market participants receive similar treatment, irrespective of their location in the EU. This will entail reinforcing the use of convergence tools as well as a reallocation of supervisory competences between national and EU levels.
An important aim of the SIU is also to enhance the integration and competitiveness of the EU banking sector, including through the deepening of the Banking Union. The Commission is to assess the overall situation of the banking system in the Single Market, including its competitiveness.
