By Amir Naser Hojati, a trader in global futures markets and a fintech entrepreneur focused on risk, capital allocation and productive investment.
Europe does not have a shortage of money. It has a problem turning savings into productive risk capital.
Across the euro area, households keep roughly 32% of their financial assets in cash and deposits, compared with about 11% in the United States. Directly held listed shares account for only around 5% of euro-area household portfolios, versus roughly 31% in America.
The difference is visible in the depth of the markets themselves. EU stock-market capitalisation amounts to roughly 73% of GDP, compared with around 270% in the United States.
The European Central Bank has estimated that if EU households moved closer to the American deposit-to-financial-assets ratio, as much as €8 trillion could potentially shift towards longer-term market-based investments.
The venture-capital gap is equally striking. In 2024, EU companies attracted only about 9.3% of global venture-capital investment, compared with 56% for US companies.
The diagnosis behind the EU’s Savings and Investments Union is therefore largely correct. Europe possesses enormous pools of private savings, yet too little capital reaches the businesses capable of turning those savings into innovation, productivity and growth.
But a correct diagnosis does not automatically justify a centralised prescription.
Europe needs a genuine single market for capital. It does not need a single financial model imposed from the centre.
The EU elite believes that Europe's lack of innovation and new emerging companies is caused by a lack of 'risk-willing capital'.
But they avoid to ask the more important question: Why is there so little risk-willing capital willing to invest in European companies in the first… https://t.co/dCqr0IhYng
— Mads Christiansen (@MadsC007) September 1, 2026
Integration is not the same as centralisation
There are genuine barriers in Europe that should be removed.
Investment funds should be able to operate more easily across borders. Investors should face fewer unnecessary obstacles when buying securities elsewhere in the Union. Companies should be able to raise capital across national markets more efficiently. National protectionism that shields incumbents should be challenged.
Those are legitimate functions of a single market.
But the Commission’s recent push for greater financial integration also goes further. Its market-integration proposals include more uniform EU rules, reduced national discretion in some areas and additional direct supervisory powers for ESMA over certain significant market infrastructures and crypto-asset service providers.
That is where Europe should ask whether integration is being confused with centralisation.
Removing barriers between national markets strengthens competition.
Making national financial systems increasingly alike does not necessarily do so.
The Commission’s own 2026 analysis provides a strong argument for subsidiarity. It issued 36 financial-sector recommendations to 23 member states, yet the weaknesses identified differed considerably.
Some countries were urged to improve access to venture and growth capital. Others were told to strengthen supplementary pensions, increase retail investment or encourage institutional investors to hold more equity.
Europe does not have one national capital-market problem reproduced 27 times.
Member states have different pension systems, tax structures, savings habits, banking sectors and investment cultures. A problem that differs by country should not automatically produce an identical solution in every country.
Policy diversity can be a form of risk management
Financial markets offer a useful analogy.
No serious investor places every asset behind the same assumption. Diversification matters because nobody can know with certainty which strategy will succeed.
Economic policy should show some of the same humility.
If Belgium experiments with one type of long-term investment account and it works poorly, the mistake remains relatively contained. If another member state develops a pension structure that successfully directs more long-term capital towards productive investment, others can copy it.
Successful reforms can spread voluntarily.
Failed experiments can be abandoned.
A uniform policy introduced across the Union has a different risk profile. If the common design is wrong, the cost of correcting it is larger and alternatives are harder to observe.
In that sense, policy diversity itself can provide resilience.
National competition also produces information. When countries use different approaches to savings incentives, pensions, taxation and investment rules, policymakers can see which arrangements actually attract capital rather than merely sounding attractive in theory.
That is a healthier form of European convergence: successful policies spreading because they work, not because they are mandated.
Europe therefore needs to distinguish between market integration and policy uniformity.
It needs fewer barriers between markets, not necessarily fewer differences between governments.
Risk cannot be regulated out of economic life
Europe’s shortage of growth capital also reflects a broader problem: an unwillingness to accept the ordinary possibility of failure.
Businesses fail. Investments lose money. Trading strategies stop working. Venture funds back companies that never become profitable.
Those outcomes are not always evidence that a market has malfunctioned. They are part of the process through which capital is reallocated and stronger ideas emerge.
The right distinction is not between safety and risk.
It is between risk and ruin.
A diversified investor suffering a manageable loss is taking risk.
A start-up failing after private investors knowingly committed capital is taking risk.
A highly leveraged institution whose collapse threatens taxpayers and the wider financial system is risking ruin.
Good regulation should make the first two possible while making the third much harder.
Europe does not need reckless finance. But it cannot create more innovative companies while attempting to protect every investor from the ordinary possibility of loss.
And a freer capital market must also be a harder one.
Those who capture the upside of successful investments should bear the downside when those investments fail.
Private rewards should come with private responsibility.
Deregulation without responsibility merely replaces bureaucracy with moral hazard.
Let member states compete to unlock savings
The EU should concentrate on what genuinely requires action at European level:
remove cross-border investment barriers;
allow financial firms and funds to compete across the single market;
improve transparency and comparability;
and prevent member states from using regulation to protect domestic incumbents.
But many decisions concerning savings incentives, pensions and investment taxation should remain close to national governments.
Member states should be free to experiment.
One country may offer simple tax-advantaged investment accounts that reward long holding periods and diversification.
Another may strengthen occupational pensions.
Another may remove tax distortions that make long-term equity investment unnecessarily unattractive.
Others may reform rules that discourage pension funds and insurers from allocating reasonable portions of their portfolios to equity, venture capital or growing private companies.
This is not a weakness of European integration.
It is subsidiarity functioning as competitive discovery.
Europe should open the market and let countries compete over how best to use it.
Europe should compete for capital, not command it
There is another uncomfortable fact.
When euro-area households do invest in equities, a large share of that money goes abroad. The ECB estimates that roughly 34% of their direct and indirect equity holdings are linked to US issuers, almost equal to the share invested domestically. Around half of euro-area household equity exposure is outside the EU.
European policymakers should not treat this as disloyalty.
International diversification is rational.
Capital moves towards markets offering the best combination of opportunity, liquidity, predictable rules and expected return.
The same lesson is visible in venture capital: the US captured more than half of global VC investment in 2024, while the EU27 attracted less than one-tenth.
The answer is not to pressure Europeans to buy European assets.
It is to make European assets more attractive.
That means easier company formation and scaling, deeper capital markets, competitive taxation, predictable regulation and greater acceptance that innovation inevitably produces failures as well as successes.
The Commission has itself argued that financial institutions need room to take “prudent risks” while remaining resilient.
That principle should extend beyond banks.
Europe needs more private capital willing to take measured risks without assuming that taxpayers will absorb the consequences when those risks fail.
A single market does not require a single financial model
The Savings and Investments Union can become an important European reform if it develops primarily as a programme of liberalisation rather than centralisation.
Remove barriers between national markets.
Allow financial institutions to compete.
Protect investors from fraud and hidden risks, but not from every normal investment loss.
Preserve room for member states to experiment with pensions, taxation and savings incentives.
Let successful reforms spread because other countries choose to copy them.
And allow investors—not governments—to decide which companies deserve their capital.
Europe already has the savings.
It has entrepreneurs, researchers and companies looking for financing.
What it lacks is enough risk capital connecting the two.
The answer is not another layer of centralised financial policy.
It is a freer European capital market in which member states compete, investors choose, successful policies are copied—and those who take risks are allowed both to enjoy the rewards and bear the losses.
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