The Pursuit Of Potency - Capital Markets In The EU | Joe Heavey

Published (in revised form) on 3rd April 2025 in Journal of Financial Supervisors Academy Volume I.

For decades, Europe has grappled with a persistent structural challenge: its capital markets have consistently underperformed relative to their potential. Joe Heavey, now Team Lead for International and Institutional Affairs at the European Securities and Markets Authority (ESMA) - who held the role of Senior Officer at the time of writing - traces the long arc of EU capital market reform, and asks whether the latest push might finally deliver.

The gap with the United States is considerable. EU equity markets account for just 11% of global market capitalisation, compared to 42.6% for the US. The average European holds around €42,000 in market-based investments, against €190,000 for the average American. Europe’s venture capital industry, which funds the startups and scale-ups of tomorrow, is 20 times smaller than its US equivalent. And since 2010, 40 European companies have chosen to list on US stock markets rather than at home, including household names like Spotify and BioNTech.

The European Union’s (EU) Capital Markets Union initiative, launched in 2015, has sought to address this gap through more than 58 reform measures. Some progress has been made, but Heavey is candid about its limitations. Better rules and regulations can create better conditions, but they don’t automatically change behaviour.

The bigger opportunity, he suggests, lies in encouraging ordinary Europeans to invest more of their savings, through better tax incentives, stronger pension systems, and simpler investment products. That shift is now central to the EU’s newly launched Savings and Investments Union, which reframes the whole project around the financial futures of real people, not just the mechanics of markets alone.

This summary is the fifth in a weekly series curated by Business News Malta, showcasing articles from the Journal of Financial Supervisors Academy (JFSA) Volume I, published September 2025.