Embedding financial competitiveness as a regulatory objective to boost Europe’s productivity

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 In-Depth Analysis report, jointly developed with Deloitte, 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.  

Judith Arnal is an Associate Senior Research Fellow at CEPS and ECRI. Pablo Zalba is Managing Director EU Policy Centre, Partner Deloitte Spain. César Gurrea is Banking Regulation Leader, Partner Deloitte Spain. This In-Depth Analysis was originally published by CEPS on 30 October, 2025.