The European Central Bank has published research in Financial Integration and Structure in the Euro Area 2026 that sets out a compact set of capital markets union indicators for the savings and investments union agenda and finds that structural blockages continue to limit European capital markets' ability to support innovation and long-term growth. The analysis highlights a mismatch between Europe's high household savings and its financing needs, with EU households allocating around one third of financial assets to cash and deposits and relatively little to securities, while a large share of the equity they do hold finances companies outside the EU. The paper estimates that aligning the EU household deposit-to-financial-assets ratio with that of US households could redirect up to EUR 8 trillion into long-term, market-based investment. It finds that half of euro area households' direct and indirect equity holdings are in instruments issued outside the EU, with US equities accounting for 34% of holdings versus 35% for domestic equities. Supervisory fragmentation, tax disparities and differences in market infrastructure are identified as barriers to scale and liquidity, while EU initial public offering and venture capital markets continue to trail the United States, where median valuations in knowledge-intensive and high-tech initial public offerings often reach ten times EU levels. As a policy implication, the research says efficient implementation of the European Commission's savings and investments union measures, including the Savings and Investment accounts recommendation, the proposed pension package, reviews of the Solvency II and IORP II frameworks, and the market integration package on supervision and market infrastructure, could support equity market development and address longer-run barriers to cross-border integration.
European Central Bank 2026-05-07
European Central Bank research identifies EU capital market bottlenecks and estimates up to EUR 8 trillion of household savings could move from deposits into long term investment
The European Central Bank’s Financial Integration and Structure in the Euro Area 2026 research proposes a compact set of capital markets union indicators and finds that structural blockages still limit capital markets’ support for innovation and long-term growth. It highlights a large mismatch between high EU household savings and financing needs, estimating that aligning the EU household deposit-to-financial-assets ratio with that of US households could redirect up to EUR 8 trillion into long-term, market-based investment. Key barriers include supervisory fragmentation, tax disparities and market infrastructure differences. Efficient implementation of the European Commission’s savings and investments union measures, including the Savings and Investment accounts recommendation, the proposed pension package, reviews of Solvency II and IORP II, and the market integration package, could foster equity market development and cross-border integration.