Unlocking Europe's Potential: How Strong Capital Markets Drive Growth and Prosperity

Stephan Leithner commented on this as follows:

“Europe will not be made all at once, or according to a single plan: it will be formed through concrete measures which bring about a de facto solidarity.” Robert Schuman's words still resonate deeply on this Europe Day, 75 years after his historic declaration. The European project has a long history – and it is far from being finished. Building on the project of the founding fathers and mothers of Europe, we've successfully merged economic interests to raise living standards and build a more united Europe. But the current upheavals make one thing clear: we must take even bolder steps now to advance European unity, strength, and competitiveness.

Turbulent times call for a strong, united Europe

The world is currently facing multiple crises, macroeconomic uncertainty, geopolitical tensions and structural weaknesses. In search of a “safe haven”, international investors have reoriented capital flows towards Europe. While the S&P 500 fell by more than 5% in the first four months of this year, the Euro Stoxx 50 rose by more than 5% over the same period. And investors are flocking to transparent, regulated exchanges. We at Deutsche Börse Group can see this in our own turnover. Just one example: on April 7 we had an all-time high in daily orders executed on Xetra Trading – all of which were executed efficiently.

We need to capture this momentum and ensure that it becomes a lasting trend. Europe must now be strengthened so that it can position itself wisely in the competition for international capital as a defender of a liberal economic order and stability.

True strength lies in self-reliance and autonomy, not in isolation. To achieve this autonomy, Europe needs a strong economy, and an independent infrastructure based on a robust and stable financial market.

Capital markets must be at the heart of the next steps

A strong Europe needs strong capital markets. They are essential for financing innovation, growth, and crucial transitions in line with technological shifts, increased defense needs and the evolving geopolitical landscape. The European Commission has just adopted its strategy for the Savings and Investments union (SIU), which is crucial to strengthen the European economy. But Europe now urgently needs to move from words to action.

Key action points of the SIU are fewer regulatory hurdles and improved rules that encourage innovation and growth. Another key action point is to invest large amounts of savings more productively – by improving access to the capital markets for retail investors, offering standardized investment products, and improving investment conditions for pension funds. Retail savers already play a central role in financing the EU economy via bank deposits, but there is significant untapped potential for them to hold more of their savings in capital market instruments. These instruments can offer more attractive returns, create scale effects, and deepen market liquidity. Experience in some Member States has already shown how targeted savings and investment accounts, especially when paired with appropriate tax incentives, can boost retail participation in capital markets. Critically, retail investors should be able to participate in strategic projects crucial to the EU's future, by co-investing with public entities.

At national levels, we also need efforts to strengthen capital markets and to mobilize private capital. Member States need to implement measures to develop supplementary pension sectors, potentially using auto-enrolment to boost occupational pensions and benefit citizens. Germany's new government has finally acknowledged the important role of the capital markets. But it must now move from words to action. Pension reforms, public-private partnerships and tax incentives are key measures to stimulate private investment, unlock growth, and share prosperity with employees.

And the change must go even deeper. As Jean Monnet, another founding father of Europe, said, we must change not only the course of events, but also “the minds of men.” Across Europe, we need a shift: from a mindset of saving to a mindset of investing.

At Deutsche Börse Group, we the engineers of strong European capital markets

A true European champion, 10,700 of our 15,700 Deutsche Börse Group employees live and work in Europe – 4,200 of them in Germany, and 6,600 in other European cities such as Prague, Luxembourg, Cork, and Copenhagen.  We've laid the foundations for a reliable, innovative, and globally competitive European capital market – that drives prosperity, secures pensions, and empowers future generations. Our work focuses on building trust and ensuring efficient capital flows through robust infrastructure. We cover the entire market process chain, from investment discovery to secure custody and cutting-edge IT solutions.

A prime example of our broad and integrated offering to Europe is our ETF success story. Deutsche Börse Group pioneered the listing of the first ETFs in Europe back in April 2000. Today, Xetra Trading remains the leading exchange for ETFs in Europe, with more listings and higher trading volumes than anywhere else. This success isn't just about a trading platform, it's about a thriving ecosystem. Many ETFs are based on indices like DAX and STOXX. Derivatives on Eurex enable ETFs to track these indices efficiently, and investors can use the same derivatives to hedge their ETF positions. Eurex Clearing minimizes counterparty risk, and Clearstream provides a seamless pan-European solution for the settlement of ETF trades. Finally, ETFs play an important role in private pension provision and in mobilizing private capital across Europe.

We're driving innovation on multiple fronts:

• Our digital platform, D7, is transforming securities issuance. Market participants can now issue electronic securities securely, cost-effectively, and fully digitally – in a fraction of the time previously required. Launched in October 2022, D7 has already reached a milestone of 1 million issues.
• We provide crypto expertise for institutional investors. By combining the strengths of Crypto Finance Group and Clearstream, we offer traditional, secure custody services for digital assets, pioneering a new era of trust and innovation in this rapidly evolving space.
• We are actively contributing to the development of the Digital Euro, by participating in the ECB's trials with Clearstream and Eurex Clearing. This is a vital step towards shaping the future of Europe.

At Deutsche Börse Group, we are at the forefront of the digitalization of our industry. And as engineers of the capital markets, we are a driving force in realizing a strong European Savings and Investments Union. We contribute with our leading capital market infrastructure and our expertise.

Let's continue the journey Robert Schuman began 75 years ago and build a prosperous Europe! In the words of Jean Monnet:

“Continue, continue, there is no future for the people of Europe other than in union.”