The European Commission’s most recent financial reform agenda brings together two previously separate objectives — the completion of the banking union and the strengthening of capital markets — under a single framework: the Savings and Investments Union (SIU). This integrated approach has strong potential, as meaningful progress in market development must take into account the bank-centered structure of Europe’s financial system. However, for the strategy to succeed, two key conditions must be met. First, European banks need to expand in scale, scope, and cross-border presence so they can play a more active role in financial integration and economic development. In this context, “completing the banking union” should go beyond reinforcing deposit protection and resolution mechanisms to support the growth and consolidation of banking institutions. Second, capital markets should be developed from the ground up, focusing initially on segments that are crucial both for banks’ operations and for improving Europe’s economic performance. After outlining the limitations of current policy agendas, the paper proposes four priority actions to strengthen the SIU, with the goal of encouraging cross-border banking activity, introducing new savings instruments, and revitalizing securitization.

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