At this year’s Sibos conference, leaders from the financial industry gathered to discuss a pressing question for Europe: how can we secure our financial future in an increasingly fragmented and competitive world?
Among several noteworthy panel discussions, one truly stood out – bringing together institutions that represent the very heart of our capital market infrastructure to discuss Europe’s financial future. Andrew Bester, ING, Piero Cipollone, European Central Bank, Marianne Demarchi, SWIFT, Stephanie Eckermann, Deutsche Börse, Bettina Orlopp, Commerzbank and Valérie Urbain, Euroclear, underscored how pivotal the coming years will be for shaping the future of Europe’s financial system.
Europe stands on a strong economic foundation, but the signs of stagnation are hard to ignore. Growth has slowed, productivity lags behind other major regions, and despite record-high savings, investments remain modest. The continent’s ability to scale, innovate and compete globally is at stake.
Strategic Resilience in an Era of Fragmentation
Europe’s economic resilience is closely linked to its ability to adapt to fragmentation in a geopolitical, regulatory and technological way. One key issue is that while Europe was an early mover in regulating digital assets, it has struggled to maintain momentum and keep up the pace in the last twelve months. Valuable time in which others, like the USA, have swept past us. The digitalisation of Euro bonds is critical, both to deepen market liquidity and to strengthen Europe’s financial infrastructure.
Interoperability and harmonisation are essential steps. Europe’s fragmented frameworks must be aligned to create a truly integrated capital market that attracts both domestic and international investors. Simplifying regulation — such as reducing the number of capital forms from 32 to four for private banks — could help accelerate progress This would require political agreement at European level and harmonization with international standards – challenging given the complexity of the issue.
Why high levels of savings aren’t being put to productive use
A fundamental challenge for Europe lies in converting high private savings into productive investment. Creating a savings and investment union could channel this potential into financing growth, transformation and resilience. Investor products tailored to diverse risk profiles can encourage broader participation and foster an equity culture. Large Eurozone countries like Germany are global laggards on adaptation of innovative investment vehicles.
The rise of neo-brokers has already shifted investor behaviour, building trust and encouraging more direct participation in the markets. This shows that cultural change is possible and that digital platforms can play a pivotal role in unlocking new investment potential.
How to accelerate capital markets and innovation
To close Europe’s innovation and digitalisation gap, a significant financial effort is required. The banking sector remains healthy and well-positioned to support this transformation, but venture capital and late-stage funding continue to fall short. Many promising European startups relocate to the United States once they require deep-pocket investors.
Europe excels in nurturing early-stage innovation yet struggles to keep and scale its success stories. There are nowhere near enough European unicorns To reverse this trend, markets must become more attractive to international investors, to attract them our capital market structure must become open, accessible and efficient. Cooperation, particularly around initiatives such as Eurobonds, is key to preventing further market fragmentation.
Knowledge is fine, but execution is critical
Europe does not lack knowledge. What it lacks is execution and speed. The pace of change must increase, supported by regulation that encourages, rather than constrains, innovation.
This is, as one panelist put it, “the last call for us.” There is political momentum and a growing sense of urgency. If Europe succeeds in translating its knowledge, capital and talent into coordinated action, it can strengthen its resilience, assert its autonomy and secure its place as a global financial leader.
We are proud that many of our clients are actively involved in building Europe’s long-term financial resilience and equally proud to contribute to this collective effort by communicating their stories.
Rebecca Quack is a consultant in Dusseldorf
