Deepening financial integration to support Europe’s prosperity

Luis de Guindos, Vice-President of the European Central Bank, delivered a keynote speech at the joint conference of the European Commission and the ECB on European financial integration.

He highlighted that financial integration is vital for Europe’s economic resilience and growth, especially amid geopolitical and technological changes. A well-integrated financial system enables better access to capital, cross-border investments, and improved financial services, supporting the prosperity, stability, and competitiveness of the EU.

Recent progress includes increased integration in asset prices, yields, and capital allocation within the euro area. However, cross-border financing remains low, with only 14% of corporate lending being cross-border, and foreign direct investment has fallen to a historic low, indicating structural barriers still exist.

De Guindos outlined opportunities for further integration through the market integration and supervision package, which aims to establish a single rulebook, support digital innovation via tokenisation, and strengthen EU supervisory frameworks. These measures are intended to deepen financial markets, boost competitiveness, and enhance strategic autonomy.

The speech also emphasized the importance of completing the banking union, including establishing a European deposit insurance scheme (EDIS), to support financial stability and cross-border banking operations. Progress in these areas is crucial for reducing fragmentation and fostering a unified financial ecosystem.

Furthermore, the ECB Vice-President called for a more coherent regulatory framework, including harmonizing prudential rules and addressing gaps between banks and non-bank financial institutions. Simplifying and harmonizing rules across Member States will support resilience, support innovation, and reinforce Europe’s position as a global financial center.

In conclusion, he urged policymakers and market participants to collaborate in advancing the savings and investments union, finalizing the banking union, and simplifying regulations to ensure Europe’s financial system remains resilient, competitive, and capable of supporting sustainable growth.