Competitiveness has become the defining challenge for the European economy, but the EU’s financial system is still constrained by a regulatory framework focusing on stability and consumer protection. Resilience is indispensable but insufficient capital towards innovation, digitalisation and green investment weakens growth and stability. The EU needs a more competitive financial system to narrow its productivity gap, specifically when compared to the US.  

The financial sector’s competitiveness can be framed at the systemic and institutional level to support productivity and growth. Systemic competitiveness is the financial system’s capacity to mobilise and allocate savings efficiently, share risk and finance innovation. Institutional competitiveness concerns the efficiency, governance and incentives of individual institutions and market infrastructures, such as profitability, authorisation and market access, and cost-income. 

This CEPS In-Depth Analysis report focuses on systemic competitiveness, as it affects productivity across the whole economy. The EU financial sector suffers from profound structural shortcomings that require the systemic integration of competitiveness into regulatory mandates, supervisory practices and accountability mechanisms.  

About the author:

Judith Arnal is Board member at the Bank of Spain, as well as a member of its Audit Committee.

Pablo Zalba is a Spanish economist and politician.

César Gurrea works at Deloitte Spain.