“The more we push reforms, the more private capital will step up—and the less public money we will need,” Mario Draghi, September 16, 2025.1
In her latest State of the Union speech, European Commission President von der Leyen called for the arrival of “Europe’s Independence Moment.” 2 Yet, others who are monitoring Europe’s incremental reforms to its Savings and Investments Union (SIU)—including reforms to the region’s securitised market—suggest that complacency is threatening the concept of European independence: “Our growth model is fading. Vulnerabilities are mounting…and we have been reminded, painfully, that inaction threatens not only our competitiveness but our sovereignty itself,” remarked Mario Draghi, former ECB President, one year after his landmark report on boosting Europe’s economic competitiveness.3
On behalf of PGIM’s European pension, insurance, and institutional clients, we continue advocating for the steps needed to revive the European securitisation market and contribute to the region’s economic prospects.4 Our latest policy engagement—and the context for this update on the sector’s revival—occurred in mid-September at Eurofi in Copenhagen.5 Our engagement consisted of bilateral meetings with more than 50 policymakers and industry professionals to discuss the proposals needed to drive EU competitiveness, strengthen capital markets through SIU reforms, and deliver better outcomes for European investors (please see Reviving European Securitisation: Translating Ambition into Reality for additional details).
We left Eurofi with mixed feelings. Based on the European Commission’s regulatory proposals published in June, we fear that complacency has supplanted the initial ambition to revive Europe’s securitisation market. The inertia may prevent Europe from capitalizing on the moment and achieving critical reforms. While it is positive to see broad agreement on the need for EU capital markets to play a bigger role in realising the region’s growth ambitions, the actions taken thus far will only result in marginal gains. Furthermore, they are likely to increase the existing overreliance on banks to fund economic expansion (Figure 1).
Figure 1
Ironically, recent proposals on expanding Europe’s capital markets would likely maintain the region’s over-reliance on bank financing. (%)
Source: SIFMA 2024 Capital Markets Factbook.
In order for the SIU to boost economic growth, it will take more than simple consensus. Therefore, tangible steps are needed to reduce market fragmentation, ensure greater European cooperation, encourage retail investments, and deepen capital markets.
At this point, public sector stakeholders are caught between the ambitions of finance ministries and the cautious approach from prudential regulators. The dynamic is exemplified by positive regulatory adjustments that are countered by additional, redundant safeguards that consequently diminish any revival effect from the reforms.
For stakeholders and regulators, it is critical to acknowledge the balance between growth and risk. Eliminating “risk” entirely is neither possible nor wanted, lest it results with “the stability of the graveyard.” The current imbalance in the EC’s proposals is due to the conspicuous absence of investor representation. In order to revive the market, policymakers should not only focus on supply (issuers and issuance), but should also focus on the demand side by easing investor requirements.
“If EU investors are not empowered to compete globally, the entire reform effort risks falling short. The EU must act now to ensure that its capital markets are not only resilient—but also globally competitive and investor-driven,” wrote PGIM’s Edwin Wilches, CFA, Co-Head, Securitised Products in Eurofi’s accompanying publication. The publication footnoted below also provides the specific details of PGIM’s latest regulatory recommendations.6
Edwin Wilches participating in a panel at the 2025 Eurofi Financial Forum, in Copenhagen, Denmark, on September 17-19, 2025.
Global demand for high-quality bonds with compelling yields—i.e., securitised assets—is rising. Yet, for securitisation issued by non-EU countries (e.g., the U.S. and Australia), Europe’s due diligence requirements put domestic investors at a competitive disadvantage compared to their global counterparts. An EU investor can only access about 30% of the global securitised market due to the EU’s uniquely prescriptive approach to investor due diligence. As the investment needs of end-users evolve, clients are increasingly looking for a more diversified opportunity set, including the global securitised market, as part of their portfolio allocation decisions.
After a tepid start, the time has arrived for co-legislators in the European Council and Parliament to inject a fresh dose of Draghi-style ambition to the securitisation framework with amendments to the pertinent regulatory proposals.
To truly unlock the potential of the European securitisation market, a more investor-centric approach to regulation is needed. In a time of fragmented geopolitical spaces and growing global uncertainties, close cooperation between European leaders to deliver ambitious growth is not just necessary, it’s a matter of independence.
1 “EU falling behind on growth, reforms even more urgent, says Draghi,” Reuters, September 16, 2025.
2 “2025 State of the Union Address by President von der Leyen - European Commission,” September 10, 2025.
3 Draghi, Mario. “The Future of European Competitiveness – A Competitiveness Strategy for Europe,” 9 September 2024
4 “Brussels proposes revamp of controversial securitisation rules,” Financial Times, June 17, 2025.
5 Twice a year, Eurofi gathers public sector and industry officials with over 1,000 people including finance ministers, head of regulators, central bank governors, senior leaders in EU institutions, as well as C-suite executives in attendance.
6 The Eurofi Views Magazine, September 2025, page 100. https://www.eurofi.net/wp-content/uploads/2025/09/eurofi-views-copenhagen_web.pdf
Source(s) of data (unless otherwise noted): PGIM Fixed Income, as of October 2025.
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