By David Barwick – FRANKFURT (Econostream) – European Central Bank Vice President Luis de Guindos on Thursday urged faster progress on European financial integration, saying the European Union needed deeper capital markets, a stronger banking union and simpler regulation to support growth and competitiveness.
In a keynote speech at a joint European Commission and European Central Bank conference on European financial integration, de Guindos said a well-integrated financial system was needed to help the EU withstand shocks, foster sustainable growth and strengthen its global position.
“In short, financial integration is crucial to the prosperity, stability and competitiveness of the Economic and Monetary Union,” he said.
The savings and investments union was “at the heart of this vision,” he said, calling it a reflection of “unity, cooperation and shared prosperity.”
Financial integration in the Eurozone had advanced significantly in recent years and was now above the average level seen since the creation of Economic and Monetary Union, de Guindos said.
Progress reflected lower dispersion in asset prices and yield differentials across bond, equity, banking and money markets, as well as greater capital allocation and portfolio diversification within the Eurozone, he said.
Still, the full potential of a deeply integrated financial system had not been unlocked, he said. Cross-border corporate lending within the Eurozone accounted for just 14% of total corporate lending, while equity market integration had shown “troubling signs of decline since 2022.”
Foreign direct investment within the Eurozone had fallen to a historical low, pointing to structural barriers to capital flows, he said.
“Equity markets, in particular, warrant immediate attention due to their critical role in fostering innovation, supporting entrepreneurship and diversifying funding sources for European businesses,” he said.
De Guindos said Europe now had “a key opportunity” to further deepen integration through the market integration and supervision package, which he said could create the institutional foundations for a market able to mobilize investment at the necessary scale.
A genuine single rulebook for capital markets, support for a tokenized financial ecosystem and a more European supervisory framework were central elements of the package, he said.
“In today’s global environment, it is crucial that this package is implemented swiftly,” he said.
The Eurozone banking sector was also central to Europe’s financial stability and economic growth, de Guindos said. Competitive and resilient banks required simplified processes, integration and economies of scale, he said.
A “crucial step” would be completing “a truly single banking market where capital and liquidity can move across borders and all deposits are protected equally,” he said.
The banking union should be regarded as a single European jurisdiction by all relevant authorities, he said.
Finalizing a fully fledged European deposit insurance scheme was “a pivotal step” toward advancing banking union, de Guindos said.
A European deposit insurance scheme would protect deposits equally, strengthen financial stability and support cross-border transactions, he said.
The free movement of capital and liquidity within cross-border banking groups would also allow resources to be transferred more efficiently in times of stress, he said.
Deeper integration needed to rest on a resilient regulatory framework, de Guindos said, arguing that the EU’s current framework remained fragmented across member states and created inefficiencies.
In December 2025, the ECB’s Governing Council endorsed recommendations to simplify regulatory, supervisory and reporting frameworks for banks, he said.
Non-bank financial institutions also required attention, he said, citing a growing regulatory gap between banks and non-banks as capital markets expand and become more interconnected.
The EU macroprudential framework should evolve through “a complementary macroprudential approach for non-banks alongside microprudential oversight,” he said.
Reducing non-prudential barriers, including differences in insolvency, tax and corporate law, would further support cross-border financial activity, de Guindos said.
“By advancing the savings and investments union, considering the banking union as a single European jurisdiction, finalizing EDIS [a European deposit insurance scheme] and simplifying our regulatory framework, we can create a dynamic and competitive financial system that supports sustainable growth,” he said.
