EU takes small steps in uphill struggle to wean savers off cash

A decade after it began working on a capital markets union, the EU is still struggling to agree on a framework that encourages savers to put their cash to work within the bloc rather than in the US, prompting some of its 27 members to go it alone.

- VALENTINA ZA JESUS AGUADO

A shopper pays with a €20 banknote at a market in Nantes, France.

(REUTERS)

After warning in a 2024 report that €300 billion ($349 billion) of European Union savings leave the region annually, former Italian Prime Minister Enrico Letta last month said that ploughing funds into US firms that reinvest in Europe was “a kind of collective suicide” caused by continued fragmentation.

Despite more than 60 legislative proposals since 2015, national interests, technical complexity and shifting political priorities have hindered progress on market integration, a European Central Bank (ECB) study said in May.

A new package is to be presented today. In the five years since the EU's latest action plan, households have stashed away 15% more in cash and bank deposits, raising the total to €12.1 trillion, equivalent to roughly 30% of their wealth, while in the US just 11% sits in cash. In the euro zone’s biggest economy, the figure is higher. Germans hold more than 40% of their financial assets in cash or bank deposits and only 12% in equities, its Council on Foreign Relations said last year.

Seven countries led by Spain have started a project that includes a ‘Finance Europe’ label to help savers select investment products that back EU firms.