Europe has the resources, but lacks efficient financial channels
European Central Bank President Christine Lagarde urged EU leaders to advance the Capital Markets Union (CMU), calling it vital to mobilize the investments required for Europe’s green transition.
“The financing needs for Europe’s green transition are estimated at €1.2 trillion per year,” Lagarde said in a speech in Oslo, noting that the private sector is expected to provide more than two-thirds of that sum.
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Europe, she said, has “a significant volume of private savings,” but “current financial mechanisms struggle to channel these resources into the necessary climate investments.” She added: “Nearly four in ten European companies consider investors’ lack of interest in green projects a serious obstacle… The missing link is capital markets.”
A renewed political push for market integration
Lagarde noted that “the political momentum behind the Capital Markets Union has never been stronger,” referencing German Chancellor Friedrich Merz’s recent call for a European stock exchange to rival those in the US and Asia.
The CMU aims to harmonize financial regulations across EU exchanges, boosting cross-border capital flows and supporting sustainable investment.
Citing lessons from the energy crisis triggered by Russia’s invasion of Ukraine, Lagarde warned that Europe’s reliance on cheap imported fossil fuels has become untenable. “Europe must now choose between maintaining an unsustainable and costly status quo, or creating the conditions to unlock the essential investments for a sustainable, secure and affordable energy system,” she concluded.
Photo: freepik.com
