The Savings and Investments Union as the catalyst for Europe’s capital markets revolution

To the point

• The SIU is a major evolution from the stalled CMU, aiming to unify fragmented EU financial markets and mobilize household savings for productive investment.
• Legislative focus is shifting to binding regulations, not directives, to reduce competitive distortions and market fragmentation across member states.
• The SIU is designed as a holistic framework and phased plan, linking banking and capital markets reforms with urgent strategic goals such as energy independence and technological competitiveness.
• Large cross-border asset managers stand to benefit most, while smaller and local managers face challenging consolidation and competition pressures as regulatory barriers fall.
• Technological innovation, modernized infrastructure, and openness to global capital are central, but political realities and integration challenges remain critical hurdles for full SIU success.

Introduction 

The European Union's unveiling of the Savings and Investments Union (SIU) in March 2025 marks a pragmatic evolution from the long-stalled Capital Markets Union (CMU), addressing structural barriers that have fragmented Europe’s financial markets for more than a decade. As European Commission (EC) President Ursula von der Leyen noted, the SIU seeks "a double win" in which "households will have more and safer opportunities to invest in capital markets" while "businesses will have easier access to capital to innovate, grow and create good jobs in Europe"¹. Beneath this high-level rhetoric, however, lies a complex reconfiguration of Europe’s financial architecture and an implicit acknowledgement by the EC that incrementalism is no longer sufficient in an era of intensifying global competition.

Launched in 2014 under Jean-Claude Juncker, the CMU carried transformational ambitions to create "a single market for capital"² capable of reshaping Europe's bank-dominated financial system and unlocking the continent's vast household savings for productive investment through pension funds, investment funds, and direct securities ownership. The project's core aim is to mobilize Europe's €33 trillion in household wealth, of which roughly 40% remains trapped in low-yielding bank deposits rather than diversified capital-market instruments capable of generating superior long-term returns^{3 4}.

From a corporate perspective, Europe’s structural imbalance is even more acute: around 70% of business funding comes from bank loans and only 30% from securities, the inverse of the US pattern^{5 6 7}. This reliance on bank financing constrains wealth accumulation, limits access to growth capital, and undermines Europe’s long-term competitiveness.

Despite broad political support and more than forty legislative and non-legislative initiatives since 2015, the CMU has produced "only few tangible changes on the ground" for savers and retail investors^{8 9}. Mario Draghi's competitiveness report identified "three main fault lines" that prevented meaningful integration: "the lack of a single securities market regulator and single rulebook, a post-trade clearing and settlement framework that is less unified than in the United States, and a lack of alignment between EU member states insolvency and tax regimes"¹⁰, ¹¹. These structural divides highlight the political reality that deeper capital-market integration requires a degree of sovereignty pooling that EU member states have historically resisted¹².

SIU's strategic recalibration

SIU builds on the CMU framework in four fundamental ways.

First, the regulatory approach. The Commission now prioritizes "legislative measures, in the form of regulations rather than directives" and proposes "a 28th legal regime"¹³ through the European Innovation Act¹⁴ to bridge differences in corporate, insolvency, labor and tax law. This shift acknowledges that directives' minimum standards approach model allowed national “gold-plating,” undermining genuine market integration.

Second, the implementation strategy. The SIU adopts a phased approach, focusing initially on politically feasible initiatives such as securitization while deferring more contentious issues most notably consolidated supervision that repeatedly stalled the CMU. A mid-term review scheduled for Q2 2027 will evaluate progress and may provide the political momentum needed to tackle remaining obstacles.

Third, a holistic financial-system framework. Unlike the CMU’s siloed, sectoral approach, the SIU recognizes the interdependence of banking and capital markets. Previous attempts to integrate fund distribution or strengthen cross-border financing have faltered because they have failed to address constraints in the banking system and other adjacent infrastructures.

Fourth, the political urgency. Spurred by the Draghi Report’s warning of Europe's "existential risk" without significantly higher investment, the SIU reflects a new geopolitical context. The Ukraine war, escalating US-China tensions, and Europe’s pursuit of strategic autonomy all "accelerate the push for strategic autonomy, where the EU seeks to reduce its dependence on other regions for critical resources, including financial services"¹⁵. The SIU therefore seeks to address immediate survival needs: energy independence, defense capabilities, and technological competitiveness. According to Draghi, at present, Europe will require an additional €750-800 billion annually by 2030 to address these climate changes, technological shifts, and geopolitical challenges.

Future vision

The European Fund and Asset Management Association (EFAMA) Q1 2025 data¹⁶ shows that European fund assets remain heavily concentrated in a handful of jurisdictions, undermining single market integration. Luxembourg holds 25% of European market share, Ireland 21%, and Germany, France and Italy collectively account for another 34%. Between 70% and 75% of all European fund assets cluster in these five member states. This concentration reflects persistent regulatory and operational divergences that favor established funds and disadvantage smaller jurisdictions, barriers the SIU must address.

If successful, the SIU would intensify competition across Europe’s asset management industry. Cross-border operators stand to benefit the most, particularly large European asset managers with sophisticated delegation models and an established presence in the key fund-domicile markets. Although it has been argued that the “SIU should be built with EU asset managers,”¹⁷ the Investment Company Institute notes that globally operating market participants already represent a major source of capital for European companies, with US-based asset managers holding €640 billion in European equities and bonds at the end of 2025¹⁸. The proposed consolidated supervision framework would allow these larger firms to distribute compliance costs across wider asset bases while eliminating duplicative compliance requirements across multiple jurisdictions. For the SIU to succeed, it must preserve openness to international capital while simultaneously strengthening Europe’s domestic capabilities.

Local and regional incumbents face the steepest challenges. Smaller managers that have relied on national discretions and protected domestic markets will confront intensified competition as regulatory arbitrage diminishes.

For mid-sized firms lacking distinctive capabilities or cross-border scale, consolidation pressures will grow. With “margins already under pressure,” the SIU is likely to accelerate mergers and acquisitions, creating opportunities for well-capitalized cross-border players while forcing smaller firms to scale or exit.

In the midst of this technological revolution, innovators will also gain substantial competitive advantages through the SIU's emphasis on modernizing market infrastructure. The EU Commission's prioritization of distributed ledger technology, tokenization and artificial intelligence creates opportunities for asset managers with advanced technological capabilities to leverage enhanced market efficiency and reduced operational costs. These innovations will particularly benefit managers capable of implementing scalable technology solutions across multiple jurisdictions.

Conclusion 

The SIU represents far more than another round of regulatory reforms. While its success would ultimately be measured by its ability to mobilize household savings and deepen Europe’s capital markets, its deeper significance lies in confronting the longstanding tension between national sovereignty and continental integration. Early developments show both promise and uncertainty. The European Parliament's 10 September 2025 vote to begin preparing a report on facilitating investment and competitiveness signals real political momentum.¹⁹ Yet the industry's continued preference for incremental, organic growth rather than transformative consolidation suggests that market forces alone may prove insufficient to deliver the scale and integration the SIU envisions.

The SIU's ultimate test would be whether it can navigate the paradox of enhancing European financial sovereignty and strategic autonomy while remaining open to global capital flows. With geopolitical pressures mounting and defense-investments need rising, the EU faces a narrow window—approximately 18 months—to demonstrate tangible results before the 2027 mid-term review. Success would require not only regulatory harmonization but a fundamental recalibration of how policymakers balance national interests with Europe’s collective imperatives. The SIU's legacy would depend less on technical refinements than on its ability to forge a genuinely integrated financial system capable of competing in an increasingly fragmented global landscape.

Disclaimer: The statements and statistics provided in this this article were accurate at the time of its initial drafting in September 2025.