It doesn’t require a highly distinguished panel to recognise that the European capital markets are not reaching their full potential. Nevertheless, it is worth considering a few key comparisons.

In the US, approximately 0.8% of GDP flows into venture capital – more than four times as much as in Europe. „I think this is a clear sign of the catch-up potential we still have here“, Bundesbank Vice President Sabine Mauderer said last week at the Frankfurt Digital Finance conference.

Ingrid Hengster, CEO of Barclays Germany, added that while Europe does have large and developed capital markets, the gap compared to the US nonetheless remains significant. In Europe, market capitalisation accounts for about 60% of GDP, whereas in the US, it stands at 180%. One of the main reasons: only 20% to 30% of people in Europe are invested in the capital markets, compared to roughly two-thirds in the US.

„We urgently need progress in the securitisation business if we want to remain competitive“, stated Hengster. Europe needs more pension funds, „whether private or state-backed.“ And for successful models, one doesn’t even need to look to the US. Sweden, the Netherlands, and the UK already provide good examples.

Augustin de Romanet, Chairman of Paris Europlace, is pushing for much closer cooperation between Europe’s two financial powerhouses, France and Germany. He announced an annual meeting of representatives from the financial hubs of Paris and Frankfurt, to improve coordination.

In his view, this lack of coordination has been the biggest issue. „We are a bit like Paris Saint-Germain used to be – a strong club with fantastic star players who didn’t cooperate well enough to fully leverage their strengths", he said.

Philippe Oddo, Managing Partner and Chairman of the Managing Board at Oddo BHF, noted that Europe’s capital markets are „lagging internationally.“ But now is „not the time for complaining – it’s time to act.“ The current window of opportunity is ideal for correcting misfiring regulations. As an example, he cited MiFID II: „Where do we stand ten years after its introduction? The number of analysts has more than halved over the past decade.“ Brussels must be made aware of the consequences of excessive regulation. „If we can no longer fund research on European companies, then who will?“

Oddo's top priority is to encourage more Europeans to invest in equities. According to de Romanet, there is no real alternative: „We are heading toward a demographic crisis. People need to secure their own financial future because they cannot assume that the working population will continue to fund pensions indefinitely," he said.

Mauderer also advocates following the example of Sweden, where a portion of pensions is funded through capital markets, ensuring more people are directly invested. But the Bundesbank executive also sees another key factor in addressing demographic challenges: „We should remain open and welcoming to talent from other countries. In today’s world, this is more important than ever – not just for the European idea.“