Same plan, same problems – Finance Watch responds to the Commission’s SIU communication

19 March 2025 - 15:46 h

Media Alert

The European Commission’s push for a Savings and Investments Union (SIU) recycles the same objectives we saw under the 2020 Capital Markets Union (CMU) action plan. So what has actually changed in the last five years?

Europe’s capital markets remain fragmented and undeveloped, not for lack of ideas, but because Member States repeatedly block key reforms.

The question is not whether integrated capital markets are necessary, but whether co-legislators will finally put collective interest over narrow national priorities. Without that, this is just old wine in a new bottle.

Thierry Philipponnat, Chief Economist at Finance Watch

Take asset management. Genuine progress requires single supervision, yet even the weaker idea of ‘common supervision’ was removed from the latest Council conclusions. The Commission’s document today reflects this retreat, weakening its earlier push for ‘single supervision’ to a vague promise of ‘harmonised supervision’. Another concession to national resistance that blocks necessary reform.

Among the perennially stalled measures, like supervisory reform or harmonising tax and insolvency laws, the SIU does introduce positive supply-side initiatives, such as the Competitiveness Fund, the TechEU Programme, and proposals to boost venture capital.

Finance Watch welcomes efforts to boost equity investment and venture capital, but without tackling well-documented barriers to market integration, these initiatives will struggle to have real impact.

Meanwhile, the continued emphasis on diluting securitisation regulation is baffling. This will not build equity capital, will not finance SMEs and will only deepen Europe’s dependence on bank lending.

Thierry Philipponnat, Chief Economist at Finance Watch

Capital markets also need buyers. The SIU does little to address the demand side. The fate of the Retail Investment Strategy (RIS) is now uncertain, and proposals to improve citizens’ access to capital markets lack adequate consumer protection measures.

Without addressing conflicts of interest in financial advice by tackling inducements in retail distribution, simply supporting more products won’t increase retail participation.

Thierry Philipponnat, Chief Economist at Finance Watch

At the same time, a report into the ‘competitiveness of the banking sector’ is concerning. Policymakers should focus on completing vital safeguards to ensure financial stability, not go looking for a pretext to weaken banking rules under the guise of competitiveness.

While little progress has been made on CMU, we are moving backwards on banking safeguards. EDIS and CMDI remain incomplete, finalisation of the implementation of the Basel framework is delayed, leaving financial stability at risk. Instead of reopening basic prudential regulatory debates under pressure from the banking lobby, the priority should be to strengthen deposit protection, crisis management and financial stability. Another financial crisis would mean, yet again, many years of delays in building a real Savings and Investments Union.

Thierry Philipponnat, Chief Economist at Finance Watch