Makhlouf urges Europe to mobilise savings amid global fragmentation
Central Bank of Ireland Governor Gabriel Makhlouf called for Europe to better mobilise its substantial savings to foster economic growth and strengthen the Single Market. Speaking at the Eurofi High Level Seminar, he highlighted the need for internal economic bridges in a fragmenting global environment.
Europe's savings paradox in a fragmented world
Governor Makhlouf highlighted Europe's paradox: substantial household savings, nearing €10 trillion in euro area deposits, are not adequately channeled into European capital markets.
Savings rates spiked during the pandemic and remain high at around 15 percent, exceeding pre-COVID levels.
This contrasts sharply with other countries where households allocate a significantly larger share of wealth to market-based instruments.
The EU faces an estimated annual investment gap of €750-800 billion by 2030.
This challenge is exacerbated by a global environment experiencing economic, political, and institutional shifts, leading to increased geoeconomic fragmentation.
The rules-based system underpinning decades of economic integration is under strain, creating a "new reality" for European policymakers.
Building bridges for growth and stability
Makhlouf emphasized the need to build "bridges" connecting European economies and financial systems to citizens.
He stressed that mobilising savings fundamentally relies on ensuring a productive and innovative economy, operating as a genuine Single Market.
This requires focusing on structural conditions that support growth, as financial market reforms cannot substitute for real economic performance.
He advocated for deeper and more liquid capital markets, including serious consideration of a European safe asset to anchor institutional capital, which he deemed an "unambiguous 'yes'".
Central banks and regulators play a crucial role by delivering price stability and financial stability, creating the essential conditions for long-term investment and efficient capital allocation.