Opinion: Andrea Beltramello, Head of the Capital Markets Union, DG FISMA at the European Commission
The European Union stands at a critical juncture where unlocking the full potential of its vast savings pool is essential to fostering sustainable growth, boosting economic resilience and enhancing citizens' wealth creation. In this context, the Savings and Investments Union (SIU) seeks to build a more integrated and efficient financial ecosystem. This initiative aims to provide savers with access to a broad range of investment opportunities and facilitate the flow of capital into areas that will drive innovation, support the green and digital transitions, and bolster strategic sectors.
As key institutional investors, insurers play a crucial role in contributing to this vision, helping citizens build wealth, mobilising long-term patient capital, and taking advantage of more integrated, liquid, and attractive EU capital markets to strengthen Europe's competitiveness.
Empowering citizens and enhancing financial literacy
For the SIU to succeed, it must focus on citizens. With approximately €10 trillion of EU retail savings currently held in low-yield bank deposits, there is a pressing need to encourage retail participation in capital markets through savings and investment accounts while improving financial literacy. It is crucial that retail investors are treated fairly and offered a wide range of choices when accessing investment products. Information must be presented to retail investors in a straightforward and easily comprehensible manner, facilitating their increased participation in the EU’s capital markets. For insurers, whose products often combine protection with investment, developing trust and delivering long-term real net positive returns for retail investors is key.
Unlocking institutional investors’ potential for growth and innovation
Insurers are major providers of long-term capital, and uniquely positioned to support Europe’s innovation ecosystem and key strategic sectors, including artificial intelligence (AI), biotech, cleantech and defence. Yet, they do not usefully leverage their full potential to invest in equity. The Commission aims to clarify the favourable prudential treatment of patient capital under Solvency II, encouraging insurers to increase equity investments while maintaining robust risk management. This may help bridge the financing gap faced by European companies, including innovative SMEs and scale-ups, thereby helping them to continue their expansion in Europe and promote the competitiveness of EU businesses.
In parallel, aligning public funding instruments, including EU ones, with the Savings and Investments Union objectives can de-risk investments and leverage private sector investments. For insurers, this integrated approach opens new opportunities to engage in innovative financing mechanisms, complementing their traditional role and enhancing their contribution to Europe’s economic resilience.
Addressing market fragmentation to boost scale and efficiency
A longstanding challenge in Europe’s capital markets is fragmentation across national borders. Regulatory differences, supervisory divergence, tax barriers, and market infrastructure silos hinder scale, liquidity, and efficiency, thereby reducing their appeal and effectiveness for companies and investors alike. Despite progress in the Banking Union and Capital Markets Union, the full benefits of the single market remain elusive due to inconsistent application of EU rules and gold-plating at the national level. For insurers, this fragmentation results in higher costs and complexity when investing across the EU, as well as more limited investment opportunities, which restrict their ability to diversify and invest at scale.
The SIU Communication emphasises the importance of dismantling these barriers, in particular, those that make it harder for trading and post-trading infrastructures and asset managers to operate across borders. By making it easier for financial market participants to grow across the EU and create conditions for market-driven consolidation and scaling, we can boost efficiency and lower costs, benefiting both businesses and citizens. Enhancing interoperability and efficiency is crucial, including by leveraging innovative technologies like Distributed Ledger Technology (DLT) and AI. This will facilitate cross-border investment flows, benefiting institutional investors by broadening access to investment opportunities and reducing transaction costs.
A shared ambition for a stronger European financial ecosystem
Achieving the Savings and Investments Union requires collaborative efforts from the Commission, the European Parliament, Member States, and the private sector. Insurers are uniquely positioned to champion the SIU’s success by contributing to citizens’ financial well-being, deploying long-term capital, and supporting growth and job creation while benefiting from more integrated capital markets and new investment opportunities.
Overcoming fragmentation, empowering citizens, and embracing innovation will unlock the full potential of Europe’s capital markets, fuelling economic growth and enhancing Europe’s resilience in a rapidly changing global landscape.