In an era of economic shifts and regulatory transformations, the Capital Markets Union (CMU) stands as a pivotal framework designed to reshape how investment flows across European borders. This ambitious project aims to reduce the heavy reliance on traditional bank lending by fostering a more integrated and diverse financial ecosystem. In a recent dialogue with Thierry Philipponnat, Chief Economist at Finance Watch, the conversation delved deep into the nuances of this initiative as it enters a critical phase in 2026.

While the overarching goal of the CMU is to mobilize private capital for sustainable growth, there remain significant debates regarding how these reforms impact the real economy. For BusinessInfoPro, understanding these dynamics is essential for any professional navigating the modern financial landscape. The economist emphasized that while market integration can unlock new opportunities, it must be balanced with robust consumer protections and financial stability to ensure that benefits reach small businesses and individual savers rather than just large financial institutions.

The "Savings and Investments Union" Rebrand: Smoke and Mirrors?

A major point of the 2026 discussion was the strategic shift to the Savings and Investments Union (SIU) moniker. Philipponnat argued that this shift attempts to solve a political problem—lack of public support—rather than a structural one. By centering the narrative on "household savings," the EU hopes to mobilize the €33 trillion currently sitting in European bank accounts.

"I am not convinced this is going to change anything," Philipponnat noted, pointing out that tax incentives for equity accounts are mostly used by the wealthy who were already investing.

Finance Watch warns that simply funneling retail money into capital markets without addressing high management fees and biased advice (inducements) could result in a transfer of wealth from citizens to the financial sector, rather than productive investment.

The Myth of the "US Model" for Europe

Throughout the interview, the economist challenged the long-held dogma that Europe must replicate the US capital market to be successful.

• Bank Reliance: While US firms get roughly 20% of funding from banks, European firms rely on banks for over 70%.

• Stability vs. Growth: Philipponnat noted that "traditional relationship banking" proved more robust during crises than market-based systems.

• The Reality Check: Finance Watch asserts that the structure of a financial system is secondary to growth; aggregate consumer demand and inequality are far more significant drivers that the CMU does not address.

The Supervisory Stalemate: 27 vs. 1

The most critical deliverable that remains unachieved is the integration of supervision. Currently, the EU operates with 27 different National Competent Authorities (NCAs). The economist highlighted that this leads to "regulatory arbitrage," where firms pick jurisdictions with the most lenient enforcement. Finance Watch advocates for a "European SEC"—a central supervisor with direct powers over systemically important market infrastructures. Without this, the CMU remains a patchwork of national interests rather than a unified economic engine.

Securitization: A Dangerous Comeback?

As of early 2026, there is a renewed push to "restore confidence in securitisation." Finance Watch remains extremely critical of this, particularly regarding synthetic securitisation. Philipponnat argued that these complex instruments often serve to help banks evade capital requirements rather than actually increasing lending to SMEs. For BusinessInfoPro, the warning is clear: reviving the tools that led to the 2008 crisis, even under the "Simple, Transparent, and Standardized" (STS) framework, requires extreme caution.

Key Policy Pillars and Critiques

Addressing the SME "Information Gap"

While the CMU aims to help SMEs, many smaller firms find listing on public markets prohibitively expensive. The economist pointed to the Listing Act as a positive step but noted that the "information barrier" remains. Investors struggle to assess the creditworthiness of cross-border SMEs. Finance Watch supports standardized quantitative credit assessments but warns that these should not replace the qualitative judgment of local banks who understand the regional context.

Conclusion: A Union for People, Not Just Portfolios

The interview concluded with a powerful reminder: a Capital Markets Union is not an end in itself. It is a tool that should serve the European Green Deal and social inclusion. Thierry Philipponnat emphasized that the "intellectual honesty" of the project depends on recognizing that more finance does not automatically mean better outcomes for society.

For BusinessInfoPro readers, the 2026 landscape is one of high stakes—where the promise of a "Savings and Investments Union" must be measured against its ability to protect the most vulnerable participants while funding the future.

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