The European Commission has set out yet another grand vision for Europe’s capital markets, with Commissioner for Financial Services Maria Luís Albuquerque promising to “empower citizens” and break down barriers to investment. Behind the lofty rhetoric, the plan leaves a familiar set of unresolved questions: how much real change will member states tolerate, and who will foot the bill?
“The magnitude of the challenges requires us to act together,” Albuquerque told a financial sector audience at the Esma conference in Paris on Wednesday. Yet beyond a renewed push to encourage household savings and tackle financial literacy, the details remain sketchy.
At the core of the so-called Savings and Investments Union is a bid to make wealth creation easier for European citizens—helping them save for a home, their children’s education, or retirement. The Commission’s ambition, Albuquerque insisted, is to “empower our citizens to put their money to work by giving them better and easier access to capital markets.”
“We need to make household wealth creation more accessible and cost-effective,” she said.
“We still don’t have a single market for financial services, and this is a competitive disadvantage for the EU.”
EU Commissioner Maria Luís Albuquerque
The obstacles to achieving this—high costs, fragmented regulation, and financial literacy gaps—are nothing new, and previous Commission attempts to solve them have delivered underwhelming results.
Tax incentives: A political minefield?
One issue that resurfaced during the Esma conference was the role of tax incentives in stimulating investment. While the Commission has largely sidestepped the politically sensitive issue, industry figures were far less coy.
“We need to talk about pensions. It should not be a taboo,” said Sandro Pierri, CEO of BNP Paribas Investment Partners and Chair of Efama, Europe’s fund and asset management association. Without meaningful tax incentives, he argued, the EU will struggle to shift household savings from bank accounts to more productive investments in capital markets.
“We need tax incentives, and we need to ensure that those tax-incentivized products are actually designed to promote long-term investment.”
Sandro Pierri, BNP Paribas IP
The industry’s message was clear: without fiscal incentives, retail investors are unlikely to move their money beyond traditional savings accounts.
The problem? Tax policy remains the fiercely guarded domain of national governments. While some panelists called for greater coordination at the EU level, there was little expectation that meaningful tax harmonization would materialize anytime soon.
Market fragmentation
Albuquerque was uncharacteristically blunt about the state of European financial markets. “We still don’t have a single market for financial services, and this is a competitive disadvantage for the EU,” she admitted.
Yet acknowledging the problem is one thing; fixing it is another. While the Commission says it will crack down on “protectionism and rent-seeking behavior,” there is little sign that member states—many of which remain wedded to their own financial industry interests—will line up to support meaningful reform.
Karel Lannoo, head of the Brussels think tank Centre for European Policy Studies (Ceps), echoed that skepticism, pointing out that European investment funds remain significantly more expensive than their U.S. counterparts.
“This is a major impediment to citizens putting their savings to work in capital markets,” he said. The Commission has made noise about addressing these costs before, but without clear plans to tackle entrenched industry practices, talk of affordability risks ringing hollow.
Esma: increasing responsibilities
A review of Esma’s mandate as the top market supervisor in the EU, due soon, is being framed as a key moment to improve regulatory convergence. Albuquerque hinted that some supervisory tasks could be carried out at the EU level rather than by national regulators—a move that would undoubtedly provoke backlash from certain capitals.
For important market infrastructures covering multiple member states, fragmentation of supervision is illogical. A harmonized supervision model could ensure more consistent regulation and a level playing field within the Union.
And then there’s the banking sector, which remains Europe’s dominant financial channel. The Commission says it wants to link capital markets more closely with banking, but here too, ambitions have repeatedly clashed with political realities.
Will member states back the Commission?
One thing is clear: legislative measures alone will not be enough. “We cannot rely only on legislation,” Albuquerque conceded, calling instead for the “joint responsibility of all interested stakeholders.” That sounds reasonable in theory. In practice, however, it often means slow progress, half-measures, and compromises that dilute the Commission’s ambitions.
“I encourage all of us to embrace ambition for Europe. Let’s challenge pessimism, narrow self-interests, and settling for less,” she said. “We must instead evolve. We must work together, and we must follow through on our commitments. There is no conflict.”
For now, industry participants are offering polite applause, welcoming the overall direction while quietly questioning whether the Commission has the political backing to see it through.
“The 450 million citizens of Europe are rightly demanding solutions that will enable them to create fair and meaningful expectations for the future,” Albuquerque declared. The reality, however, is that conflict is exactly what has stymied Europe’s capital markets ambitions for years—between national interests, regulatory fragmentation, and industry inertia.
The coming months will reveal whether Brussels can deliver meaningful reforms or whether this strategy, like its predecessors, will amount to little more than high-minded pronouncements and incremental tweaks. One thing is certain: without real enforcement and buy-in from member states, Europe’s capital markets will remain a patchwork of inefficiencies—no matter how ambitious the Commission’s rhetoric.