Capital Markets Union: A Deep Dive. Five Measures to Foster a Single Market for Capital (European Central Bank)

Summary

• VC availability in the US is three times higher than in Europe, with the gap widening over time.p.13
• Euro area public and private R&D spending reached €265 billion (2.3% of GDP) in 2021.p.14
• Green investment needs are estimated at €400 billion to over €700 billion per year.p.18
• Almost 80% of cumulative green investment needs will have to come from the private sector.p.19
• EU household financial assets amounted to approximately €34.5 trillion at the end of 2023, with around €11.5 trillion in cash and deposits.p.20
• The EU savings rate stood at around 15% of disposable income at the end of 2024, against approximately 8% in the United States and 10% in the UK.p.20
• EU household wealth grew only 55% between 2009 and 2023, compared with 151% in the US.p.21

Key insights

1. The paper proposes five key actions, including a savings and investment standard and more venture capital.p.6
2. Established public investors such as the European Investment Fund could be further mobilised to crowd in private venture capital.p.8
3. Euro area households keep one-third of their financial assets in currency and deposits.p.12
4. European private R&D spending is about 1.3% of GDP compared with 2.4% in the US.p.17
5. Household investment in bonds, shares or funds exceeded 80% in DK, NL and SE in 2021 but was below 40% in 14 countries.p.24
6. Median bid-ask spreads reached 2.4% or more in ten EU countries in 2022, against an EU median of 1.6%.p.24
7. Bank lending is poorly suited to financing start-ups because they offer limited tangible collateral.p.11