Good morning, everyone,

Im pleased to join you virtually for this important conference organized by the European Commission and the European Central Bank.

While I wish I could be there in person, I am in Lisbon, representing the Commission and standing in for President von der Leyen as Portugal celebrates 40 years of EU membership - a significant milestone for both Portugal and the EU.

I am excited to participate in todays discussions and thank our ECB colleagues and my team for organizing this important event.

Todays focus on European financial integration is crucial. We are discussing the Savings and Investments Union (SIU), which is central to the EUs economic strategy and vital for our future competitiveness.

We are also launching the latest edition of the European Financial Stability and Integration Review - our flagship annual publication that assesses our economys status. I encourage everyone to read it; it is available online today.

This years review offers a snapshot of macroeconomic developments in the EU, including financial stability, market integration, and savings patterns. It also analyzes how artificial intelligence is reshaping financial services.

There is something for everyone in this report, whether you are a policymaker, regulator, investor, or academic. As a former economics professor, I believe it is essential reading for all present.

Let me emphasize a recurring point in the report: Uncertainty is detrimental to business.

It delays investment and diminishes confidence. When firms cannot predict the regulatory, economic, or geopolitical landscape, they hesitate to act.

This hesitation incurs real costs: delayed projects, frozen capital, missed opportunities, and slower growth and job creation.

In finance, where trust is essential, predictability is crucial. Therefore, one of our main tasks is to ensure clarity and consistency in policymaking. By maintaining a transparent and stable regulatory framework, we give businesses the confidence to invest and innovate, fostering prosperity for all Europeans.

The Savings and Investments Union highlights both the vulnerabilities we must address and the strengths we can build upon. It aims to unlock the potential of Europes citizens, providing them with more opportunities to invest in a capital market designed for them, benefiting the European real economy.

This initiative is timely amid rising global trade barriers and shifting geopolitical dynamics. We must act collectively. A persistently underproductive economy with a mere 1% GDP growth prospect poses a challenge for all, requiring strong commitment from all Member States to turn it around.

We are committed to tight timelines to deliver our strategy. By year-end, we will propose initiatives on retail investment, market integration, supervision, and supplementary pensions.

This strategy demands significant effort from Member States, especially in areas where they are best positioned to act, such as taxation, pension systems, and financial literacy.

In some areas, EU-level coordination is more effective, particularly in supervision and market integration, where a common approach can yield efficiency gains.

I want to focus on fragmentation and supervision, as we have just concluded an important consultation, and I’d like to share our intentions moving forward.

Fragmentation is a persistent challenge in EU capital markets. EU stock exchanges are smaller and less liquid than their international counterparts, particularly in the US.

This lack of liquidity and fragmented infrastructure discourages companies from listing and deters investors. As a result, our markets are underdeveloped in size and depth.

The figures illustrate this: US stock market capitalization is nearly three times larger than that of the EU.

Some capital market areas are more fragmented than others, and post-trade market infrastructure exemplifies this. Cross-border activity remains limited, undermining our goal of a competitive European economy, increasing costs and deterring investment.

Enhanced liquidity, transparency, and lower transaction costs will facilitate cross-border capital flow, creating more growth and investment opportunities across Europe.

Therefore, we are actively identifying remaining barriers and taking steps to support market-led integration and enhance liquidity throughout the EU.

Consider this: equity assets held by corporates in the US represent 180% of GDP, whereas in the EU, it is only 67%.

In terms of innovation and scale-ups, private equity and venture capital investments in the EU are too small to be impactful.

In 2023, private equity investment in the EU was just 0.41% of GDP, and venture capital only 0.05%. These figures are inadequate for an economy of our size and ambition.

This underscores the importance of the Savings and Investments Union. By creating a larger capital pool, reducing financing costs, and supporting investment initiatives, we can empower businesses across sectors to grow and compete globally.

We also aim to attract private investors to co-finance projects that bolster the EU economy, such as through programs managed by the European Investment Bank and the European Investment Fund.

Our upcoming proposals will enhance interoperability and efficiency in trading and post-trading while facilitating fund distribution, especially across borders.

By establishing conditions for market-driven consolidation and scale, we can increase efficiency, cut costs, and provide tangible benefits for businesses and citizens.

As we advance toward deeper market integration, we must also ensure that our EU supervisory framework evolves. Supervision based solely on national practices may create new barriers that undermine our cohesion. A coordinated, effective supervisory approach is essential for a truly integrated and resilient European financial system.

That is why we are committed to removing barriers to an integrated market while ensuring consistent and convergent supervision across the EU.

Only then can supervisors effectively oversee financial actors while allowing them to operate confidently across borders, enhancing trust and competitiveness in our Single Market.

Operators providing the same service, whether in Greece or Denmark, should receive equal treatment across the EU, reflecting the essence of a unified financial market.

Currently, this is not the case. Supervisory practices often differ among Member States due to local specifics, resources, and varying approaches. Some supervisors adopt a risk-based approach, while others prefer a legalistic one.

These differences increase the costs of doing business and complicate investment in the EU.

Most EU financial service regulations are based on the principle of ‘passporting’ – where authorization in one EU country allows operation in the other 26.

However, this passport often remains a theoretical concept, as supervisory powers may be split, leading to divergent expectations from both home and host supervisors.

We want financial firms to experience a single market rather than a collection of distinct financial jurisdictions.

We cannot have a single market if supervisors apply the EU single rulebook differently.

In the Savings and Investments Union, we are committed to addressing this issue from two angles.

First – supervisory convergence tools.

EU supervisory authorities possess tools to reduce divergences, such as breach of Union law or binding mediation. However, these tools are used sporadically and do not systematically address significant divergences. Additionally, they may face limitations and procedural constraints, hindering their enforceability.

We need to create proper conditions or incentives for the European Supervisory Authorities, particularly ESMA, to utilize these tools. We will also examine governance and decision-making processes.

Second, in our SIU Communication, we stated that we would explore whether some supervision should shift from national to EU level. We are considering EU-level supervision for critical infrastructures, such as central counterparties, securities depositories, and trading venues, as well as major cross-border entities like asset managers.

We are evaluating various models for single supervision, including a centralized approach where ESMA handles key supervisory decisions while cooperating efficiently with national authorities.

We recognize that these proposals may have significant implications and will carefully weigh potential benefits and challenges, including resource implications for supervisors and supervised entities.

Let me conclude this point by emphasizing that I understand supervision is a challenging topic among Member States, but it is one we must address.

The political momentum supports the Savings and Investments Union. To establish efficient European capital markets that finance our strategic needs in innovation, defense, or sustainable transition, we must prioritize EU interests over short-term national ones.

We need to foster trust among supervisors so that everyone is confident that their neighbor has made the right supervisory decision.

Single supervision is not an end in itself. Our proposal will be ambitious, yet we aim to be pragmatic, always seeking the most effective solution.

Several models of EU-level supervision may exist, depending on the areas we are considering. In some cases, enhancing supervisory convergence tools will suffice.

These are all aspects we want to explore, and we will carefully analyze responses to the public consultation.

Before I conclude, I want to revisit a point I made earlier: Europe’s potential begins with its people.

Europeans are among the worlds best savers, and while you may know this, the scale of saving may surprise you. By the end of 2023, EU household financial assets totalled €34.5 trillion, with about €11.5 trillion in cash and low-yield deposits.

In fact, in 2023, EU citizens saved nearly 15% of their disposable income - almost double the rate of US households. This illustrates the scale of our potential if we provide more opportunities for citizens to grow their wealth through a stronger, less fragmented European capital market.

The Commission is already hard at work. In the coming months, we look forward to collaborating with many of you as we shape the proposals to be published by year-end.

Together, we have a genuine opportunity to build deeper, more inclusive, and more resilient capital markets in Europe.

Thank you. I count on your support and wish you a productive day of discussions.