Makhlouf urges genuine Single Market to unlock European savings
Governor Gabriel Makhlouf of the Central Bank of Ireland today emphasized the critical need to strengthen Europe's Single Market to mobilize the continent's substantial savings. Speaking at Eurofi, he outlined his vision for connecting European savings with productive investment through economic growth and market integration.
Europe's €10 trillion savings dilemma
Governor Makhlouf highlighted that euro area households currently hold nearly €10 trillion in deposits, with savings rates consistently above pre-COVID levels.
Despite this substantial pool of capital, a significant proportion of these savings continues to be invested outside the European Union.
Makhlouf questioned the simple redirection of these flows, instead urging policymakers to address the fundamental reasons why returns are perceived as higher elsewhere.
He stated, "The question we should be asking is not simply how to redirect those flows, but why those returns are perceived to be higher outside Europe, and what we can do about it.
" This challenge, he concluded, fundamentally "comes back to the performance of the real economy," underscoring the need for a more productive and innovative European economic environment to generate capital and support long-term wellbeing.
Deepening the Single Market for capital
Governor Makhlouf stressed that financial market reforms alone cannot substitute for robust real economy performance, despite the welcome Savings and Investments Union agenda.
He called for strengthening Europe's growth prospects and completing the Single Market, particularly in services.
Further, he advocated for building more effective and integrated capital markets and maintaining Europe's hallmark macroeconomic and institutional stability.
Makhlouf noted, "The Single Market remains our most powerful and underutilised asset.
Thirty years after its creation, significant barriers remain, particularly in services.
" Removing these barriers, he argued, would boost productivity and enable a step change in Europe's capital markets.
A strategic call for economic resilience
Governor Makhlouf's call for a genuine Single Market and a European safe asset highlights critical structural challenges.
His argument that financial reforms alone are insufficient underscores the need for broader economic policy coherence.
This comprehensive vision is crucial for Europe to mobilise domestic capital and strengthen its economic sovereignty in a fragmented global landscape.