European capital markets are losing their competitiveness, particularly when compared to the United States. This threatens to hold Europe back as capital markets are fundamental to finance innovation, deliver the funding needed for the green and digital transformations, and generate the necessary returns to support an ageing population. The European Banking Federation (EBF), the European Fund and Asset Management Association (EFAMA), and the Federation of European Securities Exchanges (FESE) have released a joint report on the development of European capital markets and recommendations to enhance their competitiveness. The report, co-developed by the three European associations and authored by Oliver Wyman, sheds light on progress made towards the Capital Markets Union (CMU) and gathers insights from various capital markets leaders on how to succeed in the coming decade and beyond.
Growing European long-term capital pools, and having those pools invested in capital markets, will naturally improve the depth, liquidity, and size of European capital markets.
With deeper markets, company valuations will grow, and more international capital will flow into Europe reinforced by the increasing importance of global benchmarks and passive investing. These increased inflows will, in turn, attract more issuers across equity and debt markets, both public and private. This linkage has the potential to start a self-reinforcing trend, which we call the ”capital flywheel”
Rainer Riess, FESE Director General said:
Europe needs deep and liquid capital markets to finance its companies and deliver attractive valuations. Cutting red tape and getting citizens to put their investments into capital markets are key to unlock the flywheel.
For more information about the report and its findings, please contact: Marián Caro for FESE (caro@fese.eu), Hayley McEwen for EFAMA (hayley.mcewen@efama.org), Gabriel Daia for EBF (g.daia@ebf.eu)
