Although it is not explicitly stated in the declaration, the main motivation is clear: to bridge the gap that separates European companies from their American competitors in their ability to raise capital through the securities market.
This gap is not metaphorical, but measurable. European companies prefer financing through the banking sector rather than capital markets—in addition to tradition, the tax systems of some member states are also to blame, as they favor the repayment of bank loans over the issuance of securities. The main factor, however, is a deep-rooted distrust of placing their capital in the hands of others. It is clear that such mistrust will be better overcome in a larger, more transparent market with uniform rules.
For now, however, the European economy remains almost unhealthily dependent on banks, which has repeatedly proven to be a weakness in times of crisis. After 2011, banks pulled back on cross-border investments, capital markets became fragmented, and the return to growth took significantly longer in Europe than in the U.S.
The U.S. market learned this lesson long ago. The New York Stock Exchange and Nasdaq function as a unified, deeply liquid environment where a startup from Texas can easily reach investors in Boston or Seattle. The European counterpart looks like a mosaic—Frankfurt, Paris, Warsaw, Amsterdam, Milan—each market with its own regulations, its own supervisory authority, and its own customs. Cross-border investments run into obstacles that simply do not exist in the U.S.
Take note: they mean business!
In a letter to the Commission, the finance ministers of the six countries emphasize that deeper and more integrated capital markets will strengthen Europe’s growth potential, increase its economic sovereignty, and create a firmer foundation for financing common priorities. These are words that might sound like empty rhetoric—but this time, they are backed by concrete legislative proposals and, above all, a political constellation that has long been missing in Brussels.
According to the signatories, the integration of savings and investment markets is crucial for improving financing conditions for European companies, particularly startups and firms in the rapid growth phase. And this is where the argument is strongest: innovative European companies all too often choose to list their shares in New York—not because America is their home, but because the market there offers them greater liquidity, a broader investor base, and higher valuations. Every such departure is a double loss for Europe—it loses both tax revenue and a prestigious listing.
Even a clear plan can go awry
It would, of course, be naive to applaud this plan without reservation. Brussels has a long history of projects that began as deregulation or integration initiatives and gradually grew into Kafkaesque regulatory behemoths that failed to solve the original problem but created new ones. As part of a package called the “Savings and Investment Union,” the European Commission has proposed a series of legislative measures aimed at strengthening oversight of financial market infrastructures—though member states are not fully in agreement on the technical details, which is already slowing down the entire process.
The greatest threat is not the idea of centralization itself, but the way it is implemented. Experience from previous waves of financial regulation in the EU—from MiFID II to AIFMD—suggests that harmonizing rules often means, in practice, a proliferation of reporting requirements, an expansion of compliance departments, and higher costs of market access for smaller issuers. While finance ministers also mention the intention to simplify the requirements for companies to list publicly on the stock exchange, there is often a considerable gap between intention and outcome in the European legislative process.
The issue of small and medium-sized enterprises deserves special attention. The IPO market in Europe is already significantly more complicated for smaller issuers than in the U.S.—both in terms of cost and administrative burden. If the new architecture of unified supervision introduces another layer of rules without simultaneously streamlining existing regulations, it may paradoxically end up hurting those it is meant to help the most: medium-sized companies that do not have an army of lawyers and compliance specialists. Large corporations will always be able to “buy their way” through regulation by hiring expensive consultants. And small issuers will simply prefer to stay in their national markets—or abandon the IPO altogether.
It is therefore essential that the European Commission take both aspects of this challenge seriously. Market integration, yes—but in tandem with a real reduction in the regulatory burden on smaller issuers, not merely as a promise in an accompanying document. Only then can a capital market emerge that does not merely mimic the Old World in structure but truly competes in terms of its appeal.
