r/europe • u/paneuropeanism_ Europe • 13h ago

News Von der Leyen: €300 billion in European savings flown overseas every year, primarily to the US, will be invested in Europe from now on. All 27 EU states agreed to establish the S&I Union, a step toward the full Capital Market Union

https://streamable.com/4h43qk
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u/PalantirImperator 8h ago

It still doesn't on its own give them a reason to stay, unless those investors expect growth to beat the US companies and indices these institutions are currently invested in. Japan, where I live, has tried this for years, to get their famous "wall of money" out of cash and into the financial markets with tax-incentives for investing in equity markets- but it failed to stimulate the Nikkei because all it did was push tons of money into foreign equity funds that track the S&P 500- because that's where the growth has been.

Fixing the regulatory fragmentation is nice, but absent the expectation of growth that's competitive with the US (or some other form of protectionism that punishes people for sending capital abroad), it's not going to make a significant dent. Capital markets are global now and the money will keep flowing towards where markets foresee the most growth.

It still seems like a great idea though- can't hurt.

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u/br0wntree 6h ago

Size does matter when it comes to capital markets. It is one of step many but reducing fragmentation and increasing efficiency will help even if the it is small.

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u/SpacePontifex 6h ago

Agree with you but it’s a step in the right direction. Hopefully people realise more and more nowadays that we need to position ourselves as a competitor to the US.