Across the European Union, an estimated €37 trillion sits in low-yield bank deposits rather than being put to work in capital markets. That figure, roughly equivalent to the combined GDP of the EU and the United Kingdom, underscores a persistent puzzle: why do Europeans invest so much less than Americans, and what would it take to change that?
Verena Ross, chair of the European Securities and Markets Authority (ESMA) since 2021 and previously its executive director, has spent years grappling with this question. As she prepares to step down in October 2026, she sat down with European Pulse to discuss the barriers, the policy response, and what her successor will inherit.
Twenty-Seven Markets, Not One
“We still have, more often, 27 national markets than really a single European capital market,” Ross said. That fragmentation is the core problem. The EU's long-running Capital Markets Union, recently rebranded as the Savings and Investments Union (SIU), aims to change that by integrating national markets so that capital can flow as freely as people do across borders.
“Capital needs to flow as freely as people can within the European Union,” she added. “Citizens should feel equally free to make their money work for them wherever they choose to live and invest.”
The SIU's goal is to reduce European companies' heavy reliance on bank lending—still the dominant source of corporate finance in most member states—while giving retail investors genuine cross-border opportunities. Ross described it as a “win-win situation” that could channel household savings into productive investment, supporting growth and innovation.
Why Americans Invest More
Comparisons with the United States are inevitable. America's capital markets are deeper, more liquid, and supported by a stronger culture of investing. Ross argued that the difference is not about intelligence or willingness to learn, but about structural incentives.
“In America, because you don't have state-guaranteed pay-as-you-go pension schemes, anyone who works and needs to think about his old age needs to directly be engaged in thinking about investing in capital markets,” she explained. In Europe, generous state pensions and bank deposits have historically reduced the urgency for individuals to engage with markets.
To shift that mindset, Ross said Europeans need clearer, more accessible information and better tools for comparing investment options. “They need to understand the risks, the costs, and the opportunities that come with investing in capital markets,” she said.
Wider Economic Implications
The way Europeans save does not just affect their own retirement security. It also shapes how businesses raise finance and how the European economy grows. Europe's reliance on bank credit means companies are more exposed when lending conditions tighten, as happened during the eurozone crisis and the pandemic.
“At the moment in Europe, still a large proportion of the financing comes through bank credit. But what we need to develop is a more diversified funding source,” Ross said. The SIU aims to broaden the range of financing available to businesses, encourage a more integrated capital market, and make Europe more attractive to international investors.
“We live in a global world, and capital markets are global by their nature. So we also need to be attractive to overseas investors, whether they are American, Asian, or from wherever they come, and make sure that Europe is a destination for that investment capital,” she continued.
The Risks of AI and Finfluencers
While Ross is keen to improve public understanding of capital markets, she also warned about the risks of relying on poor-quality financial information from social-media influencers and artificial intelligence tools.
“AI tools have a real role to play, but they provide both opportunities and they add risks,” she said. “At the same time, we need to be clear that AI tools can have certain biases and can actually give you wrong information. So it's also very important that investors don't just trust blindly what is coming out of whatever AI tool that they use.”
Her caution echoes broader concerns across European regulators about the rise of “finfluencers” and the potential for AI-generated advice to mislead retail investors. The challenge, she suggested, is to harness technology while ensuring that investors have access to reliable, unbiased information.
What the Future Holds
As Ross looks toward the end of her tenure, she hopes her successor will help realise a more integrated European capital market. “I really hope in 10-15 years, we have a European capital market that is deep and liquid, that provides the investment opportunities for investors to invest in European companies, and makes sure that the capital markets are there to support the European economy and its positioning and competitiveness in the world,” she said.
Whether that vision becomes reality will depend on the progress made in overcoming the longstanding barriers to a truly integrated market. The SIU's success will require not just regulatory harmonisation but also a cultural shift among European savers—and a willingness among policymakers to tackle the fragmentation that has kept €37 trillion idle for too long.
