Europe's Savings and Investment Union Faces Test of Scale, Trust, and Political Will

apr. 27, 2026

The Swedish House of Finance (SHoF) and SNS (Centre for Business and Policy Studies) hosted a finance panel examining the European Union’s Savings and Investment Union (SIU) and its implications for capital markets. Speakers from academia, supervision, exchanges, and asset management discussed how efforts to integrate markets and simplify regulation interact with national systems and market practices.

Efforts to build a European SIU are accelerating as policymakers seek to mobilize trillions of euros in household savings and reduce reliance on bank financing. In recent weeks, EU leaders have set deadlines to advance market integration, while national governments have called for pension reforms to channel more capital into markets.

At the panel, speakers examined whether the SIU can deliver the scale, liquidity, and efficiency required to support investment in areas such as innovation, defense, and the green transition.

Scale is Central to the SIU Agenda

The ability to achieve scale in European capital markets was a recurring theme, with speakers linking fragmentation directly to competitiveness.

“Scale, scale effects, network effects […] implies more competition, more efficiency,” said Thorsten Beck, Professor of Financial Stability at the European University Institute, pointing to the dominance of U.S. financial institutions in global rankings.

Beck argued that fragmented national markets limit Europe’s ability to allocate capital efficiently, particularly as the economy shifts toward intangible assets. “We need to move beyond banking, towards more market finance, towards more non-bank finance,” he said.

He also linked market depth to strategic autonomy, noting that reliance on U.S. financial infrastructure and the dollar reflects the absence of sufficiently deep European capital markets.

Trust and Institutional Design Shape Market Participation

The discussion highlighted that market development depends not only on regulation, but also on institutional design and investor trust.

“Thinking not just about the nuts and bolts of the financial system, but also about the tax code […] has made an enormous difference,” said Johan Almenberg, Director General at the Swedish Financial Supervisory Authority (Finansinspektionen), referring to Sweden’s long-term reform trajectory.

Almenberg pointed to broad household participation in capital markets as a defining feature of the Swedish system. “That really indicates trust,” he said, noting the role of pension arrangements and retail investment in supporting market depth.

He added that replicating such outcomes elsewhere in Europe would require structural and cultural adjustments, not only regulatory changes.

Centralization of Supervision Raises Trade-Offs

Proposals to strengthen EU-level supervision, particularly the role of the European Securities and Markets Authority (ESMA), were described as involving trade-offs between efficiency and national flexibility.

“There’s arguments for taking it in either direction,” Almenberg said, citing economies of scale and a level playing field on one side, and proximity to markets and innovation on the other.

He added that the evolving supervisory framework remains unclear in parts. “What exactly the role of the national authority […] is not very clear,” he said.

Market Structure and Liquidity Remain Constraints

The functioning of secondary markets was identified as a key constraint on Europe’s ability to support capital formation.

“The relationship between the secondary market and the primary market is very, very strong. They depend on each other,” said Nasdaq Stockholm’s Head of European Product Strategy Fredrik Ekström, linking liquidity and price formation to companies’ ability to raise capital.

Ekström pointed to shifts in trading patterns, including a decline in public market share relative to bilateral trading. “That trend is a little bit concerning,” he said, noting potential implications for price discovery.

He also highlighted inefficiencies in post-trade infrastructure. “The whole cost structure of settlement is way too high,” he said, referring to fragmentation across European systems.

Investment Funds Seen as a Channel for Household Savings

From an asset management perspective, the SIU was framed as a mechanism to connect savings with investment.

“The problem is the European economy […] we need more investment,” said Helene Wall, Chief Legal Officer at the Swedish Investment Fund Association.

Wall described investment funds as a key channel for mobilizing household savings, particularly in countries where large volumes of capital remain in bank deposits.

“Competitive funds will create competition […] and make prices come down,” she said, referring to efforts to harmonize rules and enable cross-border distribution.

At the same time, she emphasized the role of investor protection. “If you want households to invest, you need high consumer protection,” she said.

A Long-Term Project with Near-Term Pressure

While speakers described the SIU as a long-term initiative, they also pointed to increasing urgency driven by economic and geopolitical pressures.

Beck characterized the effort as “a long-term, generational project,” but noted that changing conditions—including the need for investment in digitalization, climate, and defense—are accelerating the policy agenda.