The European Commission has advanced its plan to turn Europe’s vast pool of private savings into a source of long-term investment, part of its ambition to create a Savings and Investments Union. The initiative, advanced through amendments adopted to EU banking and insurance rules, is meant to encourage banks and insurers to put more of their capital into equity investments supporting green technologies, digital infrastructure and defence projects.
According to the European Commission, institutional investors such as insurers manage around 10tn euros of assets but remain constrained by prudential rules that make long-term equity investment costly. By changing those rules under the Solvency II framework for insurers and clarifying the application of the Capital Requirements Regulation for banks, Brussels hopes to make it easier to mobilise private capital for strategic priorities. The package advances the Savings and Investments Union strategy announced in March 2025 and responds to Europe’s long-standing dependence on bank lending and its fragmented capital markets.
Supporting productive investments
Unveiling the measures, Maria Luís Albuquerque, Commissioner for Financial Services and the Savings and Investments Union, said they “recognise the essential role institutional investors, such as banks and insurers, can play to support productive investments and boost our competitiveness.” She added that the new Solvency II rules “will further help insurers provide long-term financing to the real economy, including equity funding which is crucial to allow young and innovative businesses to grow and innovate.” Ms Albuquerque emphasised that the Commission’s approach was “about targeted enabling, not unchecked risk-taking,” arguing that by mobilising long-term capital, the measures will “make our financial system more competitive and resilient”.
The reform, however, has met a cool reception in parts of the financial sector. The German Insurance Association (GDV) said back in March 2025 that the Commission’s proposals were “a gift with pretty wrapping” with “little content,” arguing that they do not go far enough to remove barriers to long-term investment and could even increase complexity.
Will households get on board?
There is also a question of whether households will participate. A report from the European Court of Auditors found that the pan-European Personal Pension Product (PEPP), launched in 2022 as a flagship retail investment vehicle, had attracted almost no take-up. The Financial Times reported that by mid-2024 only a handful of providers had registered products, suggesting limited public confidence in EU-level savings initiatives.
Behind the technical reforms lies a strategic goal: to make more European savings available for European priorities. Former European Central Bank president Mario Draghi estimated in his now famous competitiveness report that the EU faced an annual investment gap of between 750 and 800bn euros to meet its climate and digital objectives. The Commission aims to unlock institutional capital to help bridge that gap, but it must strike a delicate balance between prudence and policy.
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Long overdue
Supporters see a long-overdue attempt to make the EU’s financial system work for its economic transition. Critics warn that loosening prudential standards for insurers and banks could shift risk onto consumers and taxpayers if markets turn volatile. With the delegated act now under scrutiny by the European Parliament and the Council, the coming months will show whether Brussels’ attempt to turn savings into strategy can convince both regulators and investors.
The Solvency II amending delegated act is subject to scrutiny by the European Parliament and the Council over a maximum period of three months. This period can be extended by three months at the request of the European Parliament or of the Council. The amendments to the Solvency II Delegated Regulation will apply at the same time as Directive (EU) 2025/2, namely from 30 January 2027.
