From vision to reality: turning the savings and investments union into Europe’s financial cornerstone

Speech by Pedro Machado, Member of the Supervisory Board of the ECB, at the SIU seminar

Amsterdam, 26 March 2026

Thank you for inviting me to speak at the savings and investments union (SIU) seminar.^[1] It is a privilege to be here with you all in Amsterdam as we discuss the SIU, a transformative reform agenda aimed at deepening financial integration in Europe.

Let me begin with one of this city’s most brilliant sons: Cruijff. He did not just talk about football. He talked about how to see the game differently. How to find space where others saw none. How to turn the expectations of your opponents into opportunities for yourself. His genius was not physical, it was conceptual. He saw the future of the game before others could imagine it, and then he built it.

That is precisely the challenge before us today. Europe must learn to see its own strength differently. We are not a continent in decline. We are a continent in transition — and there is a profound difference between the two. We have the savings. We have the talent. We have the market. We have the institutions. What we have lacked, until now, is the architecture to connect them all in service of a common strategic purpose.

And that brings me to Cruijff’s most enduring insight: every disadvantage has its advantage. Europe’s fragmented capital markets, our dispersed savings, our historic underinvestment in our own potential — these should not be seen as permanent conditions. They are the problem Europe should be here to solve. And the SIU offers that opportunity.

The SIU is often described as a continuation of the capital markets union, but as Commissioner Maria Luís Albuquerque noted, this understates its ambition.^[2] Its purpose is putting Europe’s savings to work more effectively for growth and competitiveness. Yet Europe’s competitiveness is now closely intertwined with its ability to navigate today’s fragmented and geopolitically challenging landscape.

In this sense, the SIU is not only a financial reform – it is a strategic project aimed at addressing a broader challenge, namely the competitiveness of the European economy. At the Informal EU Leaders’ Retreat, leaders discussed ways to mobilise private investment and, in that context, agreed to accelerate work on the SIU.^[3]

Currently, Europe’s financial architecture is still too fragmented and too skewed towards bank balance sheets, while equity and market‑based financing remain underdeveloped. At the same time, Europe faces unprecedented investment needs linked to the green and digital transitions, defence, and technological sovereignty. Addressing these challenges requires a financial system that mobilises savings more effectively, diversifies risk and operates on a truly European scale.

For banks and supervisors, this is not a side project. The SIU has the potential to reshape the financial ecosystem, redefining how banks allocate risk and support the real economy. Banks will both benefit from, and be essential to, its success.

Structural diagnosis: savings, returns, fragmentation and dependency

In the European Union, the savings rate is high, but returns are not. A significant portion of household wealth remains tied up in bank deposits and low-yield savings instruments, often within nationally segmented markets. Meanwhile, European firms struggle with insufficient access to long-term risk capital. This challenge is heightened by fragmented investor bases, which contribute to persistently low levels of cross-border investments. As President Lagarde observed, the “pipeline” that connects savers to innovators is blocked at three critical stages: entry, expansion and exit.^[4]

A key issue is that European start-ups and scale-ups often rely on foreign investors due to the underdeveloped equity investment ecosystem in Europe compared with other highly innovative economies. While an open economy should welcome global investment, this overreliance risks creating path dependencies that push innovative firms to scale up, list on stock exchanges and grow outside the EU. In this sense, Europe’s financial fragmentation is a strategic vulnerability – not merely an efficiency problem.

This perspective fundamentally reframes the SIU. It is no longer just a tool for macroeconomic stabilisation, it is a key lever for strengthening economic sovereignty and resilience. The SIU aims to strengthen Europe’s financial intermediation, enabling European households to achieve better returns over their life cycle while ensuring their savings are channelled more effectively into financing productive investment.

Now, let’s take a closer look at why the SIU needs banks in order to ensure its success.

The role of banks in the SIU: beyond implementation mechanics

The development of capital markets will only succeed with banks playing a central role. Banks in Europe are at the core of the financial ecosystem, connecting households, financial products and the real economy.

Trust is at the core of the SIU. To mobilise savings, we must give people confidence and choice, not push them to invest in specific products. Banks are essential in this regard, as they hold the bulk of household savings, cultivate long-standing customer relationships and operate under robust conduct and consumer-protection frameworks.

In this context, European savings can be channelled more effectively through better and cheaper products, deeper markets and greater confidence by retail investors, without protectionism and without interference. Banks are uniquely positioned to advance this agenda. Through their central role in the intermediation process and their existing infrastructure, they design and distribute financial products, shape investor behaviour through advice tailored to individual risk profiles, and anchor confidence in the system.

Enhanced retail investor participation in capital markets should be seen as an opportunity to enhance intermediation and longer-term funding structures. Banks have a critical role to play as the natural transmission channel between European savers and European capital markets, including by safeguarding against mis-selling and preserving trust.

In addition, banks can play an important role in supporting small and medium-sized enterprises (SMEs). As emphasised in the European Commission’s strategy,^[5] SMEs must benefit from the SIU, even if most of them will never access capital markets directly. Banks are well placed to make this happen, for example through securitisation and risk-sharing mechanisms, partnerships with institutional investors that channel resources effectively and an integrated banking union that enables firms to access cross-border financing.

The importance of the SIU for banks: a technical perspective

The SIU is also important for banks, not only because of its potentially transformative impact on Europe’s financial system, but because of its core benefit: risk diversification. In a predominantly credit-based system, risks tend to accumulate on bank balance sheets, stress propagates within a narrow sector and cross-border private risk sharing remains limited. By fostering deeper capital markets, the SIU will enable a broader distribution of risk across investors, a greater reliance on equity and long-term funding and enhanced shock absorption outside the banking sector.

For banks, this diversification is not a threat; it is both a source of stability and an opportunity. A more diversified financing structure makes the economy more resilient. Also, deeper and more integrated capital markets are necessary to finance Europe’s long-term strategic priorities at scale, including the green and digital transitions.

But risk diversification is not the only area where the SIU can help banks: it can also improve their ability to operate under binding capital, leverage and liquidity constraints. The SIU will strengthen market-based funding channels, enable risk-transfer mechanisms, where appropriate, and improve the use of balance sheet capacity. Europe does not suffer from a shortage of bank credit, but rather from a structural under-supply of equity financing.^[6] Addressing this equity bias is crucial for banks to use their balance sheets more efficiently, avoid excessive long-term risk concentration and refocus their intermediation activities on areas where relationship banking delivers the most value.

The SIU is not designed to crowd-out banks, but to ensure a financial ecosystem in which bank-based and market-based finance support each other. By correcting the current imbalance between debt and equity financing, the SIU will allow banks to play to their strengths while enabling a more efficient and resilient financial system.

In addition, the SIU can address one of the most persistent barriers to Europe’s financial competitiveness: fragmentation. Fragmentation remains a defining feature of European capital markets, raising funding costs, preventing scale and weakening Europe’s position relative to other global economies. For banks, this fragmentation presents significant operational challenges. It results in duplicate compliance requirements, restricts cross-border business models and limits their ability to support customers on a truly European scale.

Finally, the SIU is directly relevant for banks’ asset management and trading activities. The reasons are as follows.

Deeper and more integrated capital markets increase the potential scale of asset management activities within banking groups. By reducing national fragmentation in fund distribution, disclosure requirements and market infrastructures, the SIU has the potential to foster the emergence of genuinely European investment firms, creating opportunities for banking groups to expand cross-border asset management, benefit from economies of scale and deliver more competitive products to both retail and institutional investors. Ultimately, such expansion of the investment arm activities may also contribute to improve banks’ competitiveness.

In addition, the SIU will strengthen the economic case for banks’ trading and market-making activities. More integrated trading and post-trading infrastructures, combined with higher cross-border issuance and a broader investor base, contribute to deeper secondary markets. Greater market depth and liquidity reduce transaction costs, improve price discovery and support more resilient market functioning. For banks active in trading, this translates into more efficient balance sheet usage, improved risk management and more sustainable revenues from market-making activities.

Finally, a larger pool of long-term investors, including households investing through funds and pension products, would support the development of equity and bond markets. This, in turn, would increase demand for essential banking services, such as underwriting, placement, hedging and secondary market trading. In this way, the SIU will reinforce banks’ role as key intermediaries across the entire capital markets ecosystem. The SIU is not just a reform agenda for Europe’s financial system – it is an opportunity for banks to innovate, grow and lead in shaping Europe’s economic future.

Supervision and strategic consistency

As we advance the SIU, one principle remains clear: integration must not come at the expense of financial stability. As market-based finance expands, risks may migrate to non-bank financial intermediaries, while interconnections within the financial system will deepen. Without careful oversight, regulatory inconsistencies could distort competition and leave growing pockets of risk overlooked, including those arising across national borders.

The European Commission’s strategy, including centralised supervision, is a fundamental pillar of the SIU agenda.

From both a prudential and financial stability perspective, integrated EU-level supervision of capital markets is crucial, as it enables effective oversight of cross-border activities and risks. Against the background of a complex supervisory landscape that remains relatively decentralised despite the inherently cross-border nature of EU capital markets, maintaining a fragmented approach to supervision poses increasing risks.

National supervisors may in fact lack a full overview of capital market players’ activities, especially beyond their own jurisdictions. In some cases, they even lack a legislative requirement for coordination, for instance via colleges of supervisors, as is currently the case for crypto-asset service providers. An integrated EU approach is is therefore needed to improve early risk identification, enable coordinated and consistent supervision across the EU and reduce the risks of regulatory arbitrage.

Some may argue that fostering supervisory convergence is a necessary and sufficient step to improve supervisory effectiveness. But one of the lessons we learned from the SSM experience is that an EU-level supervisor is necessary to enforce the Single Rulebook consistently across different jurisdictions, thereby removing unnecessary barriers to market integration. It thus represents the necessary, while not sufficient, precondition for enabling cross-border integration within the Single Market.

Conclusion

To conclude, the SIU is far more than a policy proposal – it can be the cornerstone of reforms to boost Europe’s competitiveness and strategic autonomy and resilience of its financial architecture. The challenge before us is clear: to transform a widely shared vision into concrete and timely action.

Banks are indispensable to the success of the SIU. They bring trust, scale and the operational capacity needed to mobilise savings across Europe.

At the same time, the SIU offers significant opportunities for banks. It will enable banks to diversify their risks, use their balance sheets more efficiently and take advantage of new intermediation channels in a more integrated market. Beyond the technical benefits, it will also strengthen the broader financial and economic system in which banks operate. A more dynamic economy – driven by innovative firms, deeper and more liquid capital markets and sustained long-term growth – would expand business opportunities, improve asset quality and support sustainable profitability. As business opportunities emerge through scaling and integration, EU-level supervision is necessary to offer robust oversight of cross-border and cross-sectoral risks: integrated supervision of capital markets is thus needed alongside the completion of the Banking Union, to ensure that the institutional framework is effectively structured to support market developments while safeguarding financial stability.

The case for action is undeniable. In a world of rising competitive pressures and geopolitical fragmentation, Europe cannot afford to retreat to national perspectives. Now is the time to deliver on the SIU: to build a financial system capable of withstanding global competition and safeguarding Europe’s prosperity.