European bank deposits account for over €10tn; about 70 per cent of household savings remain parked in low-risk, low-reward cash-like instruments (such as savings accounts, money market funds, and short-term government bonds). At the same time, European companies—especially innovative and fast-growing ones—continue to face shortages of patient, risk-bearing capital. What to do?
This imbalance sits at the heart of one of the European Union’s long-running economic challenges. Despite being one of the world’s largest economic blocs, the EU’s share of global capital-market activity does not match its economic weight. Capital remains fragmented along national lines, while a significant share of European savings ultimately finances growth elsewhere — mostly in the US.
The ambition to change this is not new. Since its 2015 launch, the Capital Markets Union (CMU) has been one of the Commission’s most far-reaching integration projects: one stimulating investment, growth and employment through the creation of a genuine internal market for capital. Ten years on, Europe’s capital markets remained shallow, nationally segmented and risk-averse.
Against this backdrop, the Commission rebranded the CMU into the Savings and Investment Union (SIU) in 2025. And this was more than a cosmetic change. It reflects a growing recognition that Europe’s problem is about the entire transmission chain — from household savings and bank balance sheets to long-term investment and corporate growth. What, then, did 2025 actually deliver? And what does this mean for 2026?
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From architecture to levers
In 2025, the SIU agenda gained renewed momentum, reinforced by the Letta and Draghi reports, both of which framed capital-market fragmentation as a central obstacle to Europe’s competitiveness. Their message was clear: internal barriers within the single market—of which the SIU is integral part—do more economic damage than many external tariffs.
On the demand side, the Commission continued to focus on mobilising household savings. Initiatives aimed at expanding access to simple, low-cost investment products, improving financial literacy, and encouraging long-term investing sought to make participation in capital markets less daunting for retail savers. Ultimately, Europe does not lack savings. It lacks mechanisms to deploy them productively.
Yet these measures alone could not address a more immediate constraint: the limited lending and risk-taking capacity of Europe’s financial system, particularly its banks.
Securitisation
To that, securitisation is central. In December 2025, EU finance ministers agreed on the Council’s position to revitalise and simplify the EU securitisation market — widely seen as the first key legislative deliverable under the Savings and Investment Union. Securitisation allows banks to pool loans—such as mortgages, Small and Medium-sized Enterprise (SME) credit or infrastructure financing—and transform them into tradable securities for institutional investors. By transferring risk off their balance sheets, banks free up capital that can be redeployed into new lending. In an economy where bank financing still dominates, this mechanism is critical.
“I am pleased that we have delivered on our commitments and agreed on the first new proposal under the Savings and Investment Union. This clearly shows our will to boost European capital markets and mobilise private investments, which then has the possibility to grow and contribute to the European economy,” Stephanie Lose, Danish Minister for Economic Affairs, said.
Indeed, the move marks a shift in tone. Long viewed through the prism of the global financial crisis, securitisation in Europe has been heavily constrained. The new approach seeks a careful balance: expanding market activity while safeguarding financial stability. The package also reduces administrative burden and introduces higher investment limits for collective investment funds to improve liquidity and investor participation.
Crucially for the SIU, the reform explicitly supports SME lending and infrastructure finance, while allowing cross-border pooling of assets. In doing so, it directly addresses one of the union’s core objectives: transforming national balance-sheet capacity into a more integrated European financing channel.
Insolvency
Even with tangible progress on securitisation, Europe’s insolvency regimes remain a structural challenge for cross-border investment. In June 2025, the Council agreed its position on an EU directive harmonising key aspects of bankruptcy law, marking the first substantive step toward unified insolvency standards after years of fragmentation.
The directive focuses on three core areas: improving asset recovery and procedural efficiency, standardising creditor rights, and introducing EU-wide pre-pack insolvencies, which allow firms to negotiate asset sales before formal proceedings begin. Microenterprises benefit from simplified winding-down procedures, while directors must now file for bankruptcy within three months of detecting financial distress (with opt-outs under certain safeguards). Creditors also gain clearer “factsheets” explaining national rules, and insolvency practitioners gain access to pan-EU bank account and beneficial ownership registers to speed asset tracing.
This progress should make cross-border investments more predictable, supporting venture capital and growth equity by reducing legal uncertainty around recovery rates, creditor hierarchies, and restructuring timelines. Yet gaps remain. Pre-pack safeguards, creditor committees, and key definitions retain national discretion, meaning harmonisation is still partial. Critics have called it “harmonisation à la carte,” and without uniform rules on insolvency triggers, fragmentation persists.
For the Savings and Investment Union, these developments are encouraging but highlight a hard boundary: predictable, harmonised insolvency outcomes are essential to deepen European capital markets. The June 2025 agreement demonstrates that incremental progress is possible, but full convergence will require continued political will, legislative follow-through, and careful balancing of national legal traditions with single market ambitions.
Political resolve needed
If 2025 was about restoring momentum and delivering first results, 2026 will be about political resolve. In an interview with Euronews, European Commissioner for Financial Services Maria Luís Albuquerque has suggested that it is possible to reach agreement on the remaining legislation needed to complete the SIU within a year. The challenge, she argued, is not the number of legislative files, but political willingness among co-legislators.
After years of incremental steps, there is growing recognition that fragmentation, inconsistent national implementation, and “gold-plating” undermine the Single Market’s potential, keeping Europe’s capital “in twenty-seven different pockets.” Through early progress on securitisation demonstrates that movement is possible, the question now is whether similar resolve can be applied to politically sensitive files such as insolvency frameworks, market supervision, and cross-border integration.
Concrete measures are already planned to advance the SIU next year: reviewing the rules for European Venture Capital Funds (EuVECA) and developing mechanisms to facilitate investor exits from private capital shares via multilateral intermittent trading (expected in Q3); deploying the TechEU scaleup investment programme to support Europe’s fast-growing tech champions; reviewing the Shareholders’ Rights Directive (expected in Q4); and producing a comprehensive report on the banking system, including an assessment of competitiveness. Together, these initiatives aim to deepen market integration, increase investment flows, and enhance the EU’s ability to finance innovation and growth.
