Financing the green and digital transitions, strengthening defence and supporting innovation will require capital on a scale not seen for decades. Meanwhile, Europe is rich in savings but poor in the kind of investment that expands economic capacity, strengthens competitiveness and creates sustainable long-term value.
The question therefore is not whether Europe has enough money, but whether it can direct that capital where it creates the greatest value.
Turning savings into productive investment requires an efficient financial ecosystem because capital, like water, creates value only when it can flow. Banks, together with other ABBL members such as investment firms, payment institutions, fintechs and market infrastructures, provide the channels through which capital reaches the real economy.
Luxembourg’s unique strength lies precisely in this integrated ecosystem. Few jurisdictions combine international banking, investment funds, payments, capital markets, and digital finance so seamlessly, making Luxembourg one of Europe’s most effective gateways for international capital.
Yet Luxembourg and Europe could achieve much more.
A recent report by the European Banking Federation and Oliver Wyman estimates that Europe needs around €1.4 trillion of additional investment every year until 2030. Today, banks can finance only a limited share of these additional needs under the existing regulatory framework. With targeted reforms, their contribution could increase substantially while fully preserving financial stability.
“Luxembourg and Europe could achieve much more.”
This is precisely why the European Commission’s Communication on the competitiveness of the banking sector, published on 17 July, is an encouraging development.
Its central message deserves recognition: Europe needs a banking sector that is not only safe, but also competitive and capable of financing its strategic ambitions. The Commission’s proposals on proportionality, simplification, reporting, innovation, and the Single Market all move in the right direction. The important next step will be turning these ambitions into concrete legislation.
For the ABBL, this means moving from diagnosis to delivery.
Over the coming months, we will work with our members and our European partners to help translate these principles into practical reforms. Through our contribution to the European Banking Federation, our dialogue with policymakers in Luxembourg and Brussels, and the technical expertise of our members, our objective is simple: to ensure that Europe’s financial sector has the capacity to finance Europe’s future.
Europe already has many of the ingredients for success: savings, expertise and entrepreneurial talent. The challenge is to connect them more effectively. Because Europe’s future will not depend on the amount of capital it owns.It will depend on the amount of capital it puts to work.
This column was published in the 11th edition of Forbes Luxembourg.
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