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This study analyses why European banks, despite improved cost efficiency, continue to trade at lower valuations than their United States (US) counterparts. The gap stems from limited growth potential due to market fragmentation and underdeveloped capital markets. To close this competitiveness divide, the study calls for accelerating the Savings and Investment Union (SIU), expanding investment banking capacity, and implementing smart banking regulation and supervision that reinforces market discipline ...

This paper provides an assessment of the EU banks’ competitiveness by using the US as a benchmark and looking at four interconnected dimensions: profitability, stability, ability to supply intermediation services and raise funds, product affordability for customers. Our results show that profitability, while being a key performance indicator in a market economy, does not measure the banks’ contribution to welfare more broadly and may even signal excessive market power.

This paper reviews a recent data on property markets and real estate-related bank loans in the euro area, looking at prices, mortgages, credit quality measures and some indicators of the costs faced by borrowers. It then takes a closer look at certain origination and monitoring practices adopted by significant institutions, as recently analysed by the ECB, which apparently show some room for improvement. Finally, it addresses property-related exposures held by non-bank financial institutions, with ...

The European financial system faces significant risks from excessive bank lending to the real estate sector. Historical trends show a strong link between real estate credit booms and banking crises. Current data indicate that real estate loans constitute a substantial share of banks' corporate loan portfolios, with varying risk levels across countries. Key drivers include expansionary ECB policies and regulatory incentives favouring mortgage lending. Strengthening oversight, improving data collection ...

The institutions of the Economic and Monetary Union (EMU) are largely responsible for establishing European monetary policy, rules governing the issuing of the euro and price stability within the EU. These institutions are: the European Central Bank (ECB), the European System of Central Banks (ESCB), the Economic and Financial Committee, the Eurogroup and the Economic and Financial Affairs Council (Ecofin).

InvestEU is the European Union’s flagship investment programme aimed at mobilising public and private financing to support sustainable infrastructure, innovation, SMEs, and social investment across the EU. As of June 2024, it has successfully mobilized around EUR 280 billion in investments using a EUR 26.2 billion guarantee, but faces concerns over guarantee depletion, excessive burdens and lack of transparency. The European Parliament plays a crucial oversight role, particularly in ensuring accountability ...

In order to ensure the stability of the Economic and Monetary Union, a robust framework is needed to prevent unsustainable public finances as far as possible. A reform (part of the ‘Six Pack’) amending the Stability and Growth Pact (SGP) entered into force at the end of 2011. Another reform in this policy area, the intergovernmental Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (TSCG), including the Fiscal Compact, entered into force in early 2013. Furthermore ...

This paper outlines the European Union’s institutional framework for defining and executing an active euro exchange rate policy, against the backdrop of a potential policy shift by the United States. It outlines the emerging US debate on linking exchange rate policy with trade and security objectives and provides a background on past currency interventions by US and other central banks such as the Plaza Accord. The final part opens a discussion over the functioning and limits of the EU’s legal framework ...

On 19 March 2025, the European Commission unveiled its strategy for a savings and investments union with the goal of directing EU households' savings towards productive investments. This policy includes a review of existing EU pension legislation to increase participation in supplementary pensions and recommendations for auto-enrolment pension frameworks. The pan-European pension product (PEPP), introduced in 2019 through a regulation that became applicable in 2022, has only been registered in four ...

This infographic provides insight into the economic performance of Canada and Mexico compared with the European Union (EU) and examines the trade dynamics between them. For 2024, the growth rate for Canada is expected to be at 1.3%, whereas Mexico is at 1.5%. The trend in inflation rates is continuing to decline, with estimates of 4.7% for Mexico and 2.6% for Canada. Overall trade relations between the EU, Canada, and Mexico have shown positive growth over the last two decades. Since 2020, both Canada ...