Europe’s long and winding road to a capital-markets union has become a case study in regulatory inertia. But financial insiders—from the chief executive of Boerse Stuttgart to International Banking Association leaders—blame the snail-speed progress on an excess of parochialism rather than a lack of ambition.
The goal of the project of a Capital Markets Union (CMU) is to knit its fractured financial markets into a cohesive whole. “The US capital market is often cited as a model. But even there, there is no central stock exchange, but dozens. Competition creates momentum, a monopoly weakens it,” says Matthias Voelkel, CEO of Boerse Stuttgart.
For Mr Voelkel, the solution lies not in creating a single European exchange but in dismantling national barriers that stifle cross-border investment. “What is crucial are uniform rules for everyone that make competition possible. That is exactly what we need in Europe,” he says.
Costs and complexities
The obstacles are legion. Tax regimes differ across member states, complicating cross-border holdings. Insolvency laws vary, deterring investors unfamiliar with local quirks. Transparency requirements diverge, muddying comparisons. “Until this is harmonised, Europe will remain fragmented,” Mr Voelkel insisted in an interview with Table.media.
Scale compounds the problem: America’s capital markets, with twice the volume of Europe’s, benefit from deeper liquidity and a retail-investor culture that EU policymakers have struggled to foster. Infrastructure fragmentation—such as Europe’s 27 separate securities-settlement systems, versus America’s single depository—adds cost and complexity. “These are silos that can only be overcome through digitalisation,” he notes.
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Sweden offers a glimpse of what harmonisation might achieve. Its tax-subsidised, equity-based private-pension system—a policy innovation dating to the 1990s—has nurtured a retail-investor base that energises public markets. Mr Voelkel’s firm operates NGM, a Swedish exchange where 25 small and medium-sized enterprises have listed in the past 18 months—more than Germany’s entire market hosted in the same period.
A funding squeeze
“IPOs are subscribed not only by institutional investors, but also by private investors,” he explains. Cultural factors matter too: “Swedes are less risk-averse than Germans. While many people in this country believe that they are not taking any risks if they do not invest their money—which is the biggest risk in the long term—Swedes see opportunities.”
Germany’s aversion to equity culture, by contrast, reflects both historical caution and policy shortfalls. Successful start-ups in Sweden have spawned networks of angel investors and family offices that recycle capital into new ventures—a dynamic largely absent in Germany. Political choices compound the gap: Berlin has not replicated Stockholm’s pension incentives, leaving households reliant on low-yield savings accounts. The result is a dearth of growth capital for SMEs, which Mr Voelkel argues cannot be solved by regional exchanges. “Smaller companies need visibility and access to investors—and they no longer think regionally, but nationally, Europeanly or globally.”
Our role is that of an infrastructure provider for digital assets—and that is precisely where our added value lies. — Matthias Voelkel, CEO of Boerse Stuttgart
This funding squeeze drives European giants like Linde and Birkenstock to list in New York—a trend Mr Voelkel calls “not a good development for Germany and Europe”. American markets offer not just scale but analyst coverage and investor engagement that European venues struggle to match. “They need the size and analyst base of the US,” he concedes. The exodus risks a vicious cycle: as blue chips depart, liquidity thins, deterring newcomers.
The rise of Bison
Boerse Stuttgart’s strategy for navigating this landscape hinges on niches overlooked by larger rivals: private investors and cryptocurrencies. While giants like Deutsche Börse court institutional clients, nearly all of Boerse Stuttgart’s trading volume flows from retail investors via banks and brokers. Its Bison app—a crypto-trading platform with nearly 1m users—embodies this focus. “Cryptocurrencies are here to stay. Bitcoin is now the seventh most valuable asset in the world,” Mr Voelkel declares, shrugging off volatility as “part of the game”.
Bison’s rise reflects both foresight and necessity. When Boerse Stuttgart entered crypto in 2019, institutional interest was scant. “None of our traditional banking and brokerage clients were active there,” Mr Voelkel recalls. The firm pivoted to retail, prioritising security and regulatory compliance—a contrast to offshore crypto exchanges. “Users have the security and reliability of a stock-exchange group with 160 years of history,” he asserts. The app now rivals neobrokers like Trade Republic, though Mr Voelkel downplays direct competition: “Brokers are our institutional customers, not competitors…Bison concentrates on digital assets. That is our strategic orientation.”
For banks, Boerse Stuttgart positions itself as an enabler rather than a rival. It provides white-label crypto infrastructure for Germany’s cooperative banks and Italy’s Intesa Sanpaolo, handling trading and settlement behind the scenes. “We are not competitors, but service providers in the background,” Mr Voelkel stresses. This behind-the-scenes role, he argues, is vital for mainstreaming digital assets: “Our role is that of an infrastructure provider for digital assets—and that is precisely where our added value lies.”
Leaking to America
Yet such innovations cannot offset Europe’s structural handicaps alone. Mr Voelkel urges policymakers to embrace three reforms: harmonise insolvency and tax rules to ease cross-border investment; expand retail-investor incentives, perhaps via pension reforms; and modernise settlement infrastructure. Without these steps, he warns, Europe’s capital markets will keep leaking companies and capital to New York. “It is crucial that we become more attractive overall in Europe—through more private capital in the market and strong, internationally visible trading venues.”
The idea of a CMU has existed since the Treaty of Rome was signed in 1957, though it wasn’t until 2015 that the first action plan was adopted. The Commission says the current proposals, such as for the Savings and Invertment Union, will allow for greater spending on its strategic priorities and make the EU more attractive to investors and companies.
It’s absolutely vital for the EU to have a top-notch capital markets union. — Jan Willem Hoevers, co-chair of IBA Securities and Capital Markets Committee
The proposals aim to bring together the progress made under two capital markets union (CMU) action plans and through efforts to develop a banking union. It’s “absolutely vital for the EU to have a top-notch capital markets union,“ says Jan Willem Hoevers, co-chair of the International Banking Association‘s Securities and Capital Markets Committee. He believes the EU’s proposals should accept the context of competing international markets. Companies with different needs and at various stages of growth should have access to adequate services in the EU so they don’t have to look further afield.
Savings over investment
Mr Hoevers, who is a partner at De Brauw Blackstone Westbroek, an Amsterdam-based international law firm, sees integration as an incremental process that could take decades. “Maybe it’s a permanent process,“ he says, “in which you try to devise a market environment that suits the challenges of today.“
The proposals reflect a feeling in the EU that the traditional role of banks as the main source of money for businesses is no longer sufficient and that alternative sources must step in. „There’s lots of money available in Europe but it’s not always going to European businesses,“ Mr Hoevers explains.
Success is not just one, two, or three things that you can implement. They all must work together. — Annika Andersson, Vice-Chair of IBA Securities and Capital Markets
In some EU member states, there’s a long history of citizens using banks for their savings rather than investing them in the capital markets, and this mindset could be difficult to change. However, other countries, such as Sweden, have an established track record of retail investment in capital markets and could be a reference point for how the Commission’s proposals might play out in practice.
Stakes beyond finance
Annika Andersson, Vice Chair of the IBA Securities and Capital Markets in M&A Subcommittee, says Sweden has “what the Commission is hoping to achieve with a capital markets union.“ However, she highlights that the Swedish market has developed over a long period of time and replicating its success could be a challenge. Success, she says, doesn’t require “just one thing, or two things, or three things, that you can implement; they all must work together.“
The stakes extend beyond finance. Deep, integrated capital markets would help Europe fund its green transition, nurture tech rivals to Silicon Valley, and reduce reliance on foreign investors. As Mr Voelkel’s mix of frustration and ambition suggests, the project remains as urgent as ever—and as elusive.
