Europe does not have a shortage of money. It has a problem turning its vast pool of savings into investment capable of financing growth, technology, defense and the green transition.
That is the central message from Eurogroup President Kyriakos Pierrakakis, who is also opening a much broader debate over the future size and structure of Europe’s banking industry.
In an interview with the ECB Supervision Newsletter, Pierrakakis argues that Europe has succeeded in building a stronger and more resilient banking system, but has yet to create a genuinely integrated financial market.
And that fragmentation, he warns, is now costing Europe growth and competitiveness.
Europe’s savings are not reaching investment
The core problem is how European capital moves — or, more precisely, how it often fails to move.
Europe has abundant savings, but too much of that money remains in low-yield deposits rather than being channeled into productive investments, innovative companies and businesses seeking the capital needed to scale globally.
Pierrakakis’ argument is straightforward: Europe does not lack capital. It lacks an efficient bridge between savings and investment opportunities.
That weakness is becoming increasingly important as the continent faces enormous financing requirements in artificial intelligence, digital infrastructure, clean energy, defense and industrial modernization.
Europe’s banks have a size problem
The Eurogroup president also puts one of the most sensitive issues in European banking firmly on the table:
scale.
Even the euro area’s biggest banks remain relatively small compared with the financial giants of the United States and China.
Pierrakakis notes that the five largest euro-area banks combined are roughly comparable in size with the largest banks in the United Kingdom and Japan, despite serving a much larger market. They also remain significantly smaller than the biggest American and Chinese institutions.
One of the main reasons, he argues, is the limited degree of cross-border banking integration.
Europe may have a Single Market on paper, but its banking system still operates to a significant extent behind national borders.
The push for bigger, cross-border banks
Pierrakakis wants that to change.
His agenda points toward greater cross-border banking integration, allowing banks to operate at genuinely European scale and capital and liquidity to move more freely across the Banking Union.
Greater scale matters because large financial institutions have more capacity to invest in expensive technologies such as artificial intelligence, cybersecurity and digital infrastructure, while also financing major corporate and strategic investment projects.
Pierrakakis points out that technology investment by Europe’s largest banks, relative to their assets, remains significantly below that of their US counterparts.
That is no longer simply a banking issue.
It is becoming a question of whether Europe can compete technologically with the United States and China.
Banking Union returns to center stage
At the heart of the strategy is the unfinished European Banking Union.
Pierrakakis argues that cross-border banking should become the norm rather than the exception, with fewer barriers preventing liquidity and capital from moving across member states.
The objective is to create a system in which savings accumulated in one part of Europe can more efficiently finance productive opportunities elsewhere.
Another unresolved issue is the European Deposit Insurance Scheme (EDIS).
Pierrakakis argues that common depositor protection and greater banking integration should advance together.
The broader political logic is significant: if deposits enjoy comparable protection across the Banking Union, governments have less reason to defend national banking systems as separate financial fortresses.
Cut the red tape — but not the safeguards
The second major pillar is regulatory simplification.
Pierrakakis is careful to stress that simpler regulation does not mean weaker supervision.
His argument is that Europe needs rules that remain strict but become more coherent, proportionate and predictable.
Banks operating across several EU countries can currently face different interpretations of the same European rules, adding costs and regulatory uncertainty.
“Trust does not derive from the number of rules,” is the essence of his position. What matters is the quality of institutions, effective supervision and confidence that risks are properly understood and managed.
Taking the gov.gr philosophy to European banking
Pierrakakis also brings his experience from Greece’s digital transformation into the debate.
His proposal rests on a deceptively simple principle:
collect information once and reuse it.
Instead of banks repeatedly submitting similar information in different formats to the ECB, European Banking Authority, national supervisors and resolution authorities, Europe should move toward common data standards and greater interoperability.
The goal is to reduce compliance costs while allowing supervisors to spend less time reconciling data and more time identifying actual financial risks.
Artificial intelligence could eventually reinforce that model, helping supervisors detect anomalies and emerging risks earlier — without replacing human judgment.
Europe’s real battle is over investment
Behind the banking debate lies a much larger economic problem.
Europe needs massive investment simultaneously in defense, artificial intelligence, energy, infrastructure, digitalization and the green transition.
At the same time, productivity growth is under pressure and global competition with the United States and China is intensifying.
Pierrakakis identifies slowing productivity, geopolitical fragmentation, rising investment requirements and the rapidly changing security environment as challenges that increasingly require coordinated European action.
The paradox is that Europe already possesses much of the capital it needs.
The difficulty is getting that capital to the companies and projects capable of generating future growth.
The new Eurogroup bet
Pierrakakis is therefore setting out a clear economic agenda:
complete the Banking Union, advance the Savings and Investments Union, encourage cross-border banking, increase the scale of European banks and simplify regulation without sacrificing financial stability.
The debate ultimately goes far beyond banking.
It is about whether Europe can turn the enormous wealth accumulated by its citizens into economic power.
Because in the new global competition, having the money is no longer enough. Europe must be able to put it to work before investment, innovation and its most promising companies move elsewhere.