How can the EU achieve its aim of a Savings and Investments Union?

The Savings and Investments Union (SIU) is another name for a single EU financial system, which would be more efficient and resilient than the current coexistence of 27 fragmented national financial systems. The current emphasis is on capital markets union, or in other words, ensuring that stocks and bonds issued in the EU are not viewed as German, Italian, Slovakian (or any other nationality), but as a single pool of equally trustworthy EU securities.

In “Breaking the Deadlock”, just published by Bruegel, I explain why and how the EU could move decisively towards that vision through capital market supervisory integration. EU capital markets are currently supervised by a hybrid system that involves an EU agency, the European Securities and Markets Authority (ESMA), alongside national capital market authorities. This system is inefficient and unduly complex, ensuring neither market integration nor effective supervision to support confidence in securities issued in the EU’s multiple financial centres.

The way to reform it is by pooling all capital market supervisory authority into a transformed “multicentric” ESMA that would operate mostly through its own offices in EU countries, ensuring supervisory consistency and no preferential treatment for any single financial centre. Political leaders know the urgency of moving SIU from talk to action; they can and should decide on this reform quickly. Implementation would take about a decade, at the end of which an improved and simpler supervisory system would enable Europe’s capital markets to reach the scale and efficiency required to match its large investment needs.

The Why Axis is a weekly newsletter distributed by Bruegel, bringing you the latest research on European economic policy. 

Sign up for the newsletter.