Keynote speech by Luis de Guindos, Vice-President of the ECB, at the joint conference of the European Commission and the European Central Bank on European Financial Integration<\/p>\n
Frankfurt am Main, 7 May 2026<\/p>\n
It is an honour to speak to you today on a topic that lies at the core of Europe\u2019s economic resilience and future growth: financial integration. In an era of geopolitical fragmentation, technological change and economic uncertainty, ensuring that the European Union\u2019s financial system is robust and competitive is not just an economic imperative \u2013 it is a strategic necessity.<\/p>\n With a well\u2011integrated financial system, the EU can weather external shocks, foster sustainable growth and strengthen its position in an increasingly competitive global landscape, while also allowing businesses to access capital more easily, facilitating cross\u2011border investment and providing Europeans with better financial products and services. In short, financial integration is crucial to the prosperity, stability and competitiveness of the Economic and Monetary Union.<\/p>\n The savings and investments union is at the heart of this vision, reflecting the essence of the EU project itself: unity, cooperation and shared prosperity.<\/p>\n Today, I would like to begin by taking stock of the progress that has been made in financial integration, before highlighting the reforms \u2013 particularly of market integration and supervision \u2013 that are now within our reach. I will then outline how we can simplify and strengthen our regulatory framework to support a truly competitive and resilient European financial system.<\/p>\n Key developments in financial integration<\/p>\n Over the past few years, financial integration in the euro area has advanced significantly, cementing its role as a cornerstone of the EU\u2019s economic architecture. ECB indicators show that financial integration is now above the average level seen since the creation of Economic and Monetary Union. The progress reflects two improvements: first, a lower dispersion in euro area asset price and yield differentials across bond, equity, banking and money markets. And second, a higher degree of capital allocation and portfolio diversification within the euro area, with cross-border debt activity standing out as a key driver. These positive developments have not only deepened integration but also strengthened the resilience of these markets.<\/p>\n Despite significant progress, the full potential of a deeply integrated financial system has still not been unlocked. Cross-border financing in areas like bank lending and equity markets remains at relatively low levels. For example, cross-border corporate lending within the euro area accounts for just 14% of total corporate lending[1<\/a>], with equity market integration showing troubling signs of decline since 2022. Foreign direct investment within the euro area has fallen to a historical low, shining a light on the structural barriers that still hinder seamless capital flows.<\/p>\n These contrasting trends underline the need for targeted policy interventions to address structural barriers and boost integration in underperforming areas. Equity markets, in particular, warrant immediate attention due to their critical role in fostering innovation, supporting entrepreneurship and diversifying funding sources for European businesses.<\/p>\n The principle that \u201ccapital follows the real economy\u201d underscores the relationship between economic growth and financial integration. To fully reap the benefits of a unified financial system, EU policy initiatives, Single Market reforms and the savings and investments union must advance together. If we coordinate our efforts, we can build a resilient and unified financial ecosystem that supports European growth and strengthens the EU\u2019s global competitiveness.<\/p>\n Looking ahead \u2013 further integrating capital markets<\/p>\n We now have a key opportunity to further deepen integration. The market integration and supervision package \u2013 if adopted \u2013 would lay the institutional foundations for a truly integrated market capable of mobilising investment at the scale Europe needs.[2<\/a>] There are three features of the package that I want to highlight.<\/p>\n First, a genuine single rulebook for capital markets. This means further harmonising rules and transforming provisions from directives into regulations that are directly applicable across EU Member States. A single rulebook strengthens the level playing field, reduces legal uncertainty and fosters greater consistency.<\/p>\n Second, support for a tokenised financial ecosystem. By adapting the distributed ledger technology (DLT) pilot regime, we can facilitate innovation in digital financial services while preserving robust regulatory oversight. Europe should be a place where new technologies can scale up safely and efficiently.<\/p>\n Third, a more European supervisory framework. Stronger, more consistent supervision at EU level will enhance the resilience of the system and remove the barriers that still limit cross\u2011border capital market integration.<\/p>\n Taken together, these measures are much more than mere technical adjustments. They build the foundations for deeper financial integration and a more dynamic capital market, thereby boosting the EU\u2019s competitiveness and strategic autonomy. In today\u2019s global environment, it is crucial that this package is implemented swiftly.<\/p>\n Simplification, integration and competitiveness of the banking sector<\/p>\n