Capital market: Use money: Brussels wants to make savers into investors

Europe’s citizens save trillions – and hardly put them in bank accounts. In order for more citizens to invest their money instead, the EU Commission wants to strengthen the financial education of consumers. Since, in addition to knowledge, simple and easily accessible opportunities also need to invest, it also wants more so-called savings and investment accounts for consumers. What exactly does the Brussels authority want and why? Questions and answers.

Why should financial education be improved?

In 2023, a survey by the EU Commission showed that only every second in the EU had average financial knowledge, less than one fifth over a high one. The survey also made it clear that there are gaps, especially among women, young people, people with lower income and a lower level of education.

With improved financial competence, however, people could better do households, avoid fraud, manage debt responsibly and save more, according to the Commission. With its strategy now presented, the authority also wants to ensure that citizens take part in the capital markets on a solid basis.

How does the Commission want to improve the financial education of citizens?

According to the authority, there should be initiatives from public and private actors to improve financial competence in all member states. An EU-wide information campaign is intended to strengthen the national measures. The Brussels authority also encourages the member countries to use existing EU financing channels for initiatives and research projects on the subject. In order to observe progress and developments, the Commission wants to carry out surveys, among other things, regularly.

What should the savings and investment accounts make up?

The accounts of banks or neo-brokers, for example, should be easy to use and be flexible as well as offer broad investment options and tax incentives. Very risky or complex products, such as certain derivatives or some cryptocurrencies, should not be approved.

In addition to a lack of financial competence, according to the Commission, there are also complicated processes in investing and a fragmented financial market with few competitions are reasons why there is a lot of money on savings accounts. In order for citizens to have easier opportunities to invest their money in the future, the so-called savings and investment accounts are to be created in more member states. For this, the Brussels authority speaks recommendations to the countries.

Why does the EU Commission want more saving to land on the capital markets?

According to information, the savings rate in the EU is one of the highest worldwide: around ten trillion euros savings of citizens are on the bank in the EU. At the same time, money is urgently needed in the community of states, for example for upgrading or the green and digital change. For example, if more citizens invest their money in listed companies, more capital is available.

In an optimistic scenario, the Commission therefore estimates, for example, that a stronger participation of private investors in the capital markets could increase investments in European facilities over ten years by more than 1.2 trillion euros. “This gives EU companies better access to capital and more financing options to support their growth and innovation,” said the Commission. According to them, this could also include innovative small and medium -sized companies. Overall, the savings and investment accounts played an important role in strengthening the EU’s competitiveness, according to the Commission.