31/03/2025
While the geopolitical environment is becoming increasingly challenging to navigate for globally operating financial services firms and their clients, the EFR Members reiterate their unwavering commitment to continue supporting their customers and the European economy. It is pertinent to stress the benefits that the EU has brought to consumers and businesses. To advance these benefits further, coordinated action is needed to strengthen the Single Market and the competitiveness of the European financial sector.
Europe must adopt a consistent policy agenda to strengthen its financial sector, support innovation, and ensure long-term investment. This will help Europe remain a global player and achieve strategic autonomy. Strong regulatory governance is key, as an overly heavy regulatory burden reduces competitiveness. Strengthening the competitiveness of the European financial sector is among the best defences against fragmentation. Financial services are partners in advancing strategic autonomy and defragmentation of rules. Concrete actions need to be taken swiftly, such as the various initiatives relating to pensions and long-term savings.
Cybercrime has emerged as one of the most important global risks affecting societies and economies, with the financial sector being a prime target. The current geopolitical situation requires greater coordination and a stronger toolbox to mitigate cyber-attacks not only at national level but also at European/NATO level. Since cyber risks and attacks are not limited by national boundaries, a concerted international effort is required to effectively address responses to the evolving cyber threat landscape. Cyber security is a joint public and private sector responsibility.
The financial sector plays an important role in financing the transition to a sustainable future. The sector should be seen as an enabler rather than the sole driver. As banks are the main financiers of the European economy and insurers are Europe’s largest institutional investors, they both play a significant role in financing the transition to a more sustainable economy. While the financial system is an important element in the economic transformation, the ultimate goal is a sustainable economy that enables growth and job creation. Governments must provide an enabling environment with ambitious and predictable climate policies, promoting demand and incentives to invest in decarbonisation.
The EFR Report 2025 addresses the importance of
- The Growth Imperative: For Europe to remain a global player and achieve all the planned transitions, we need a strong and stable financial sector that can play its role as a key enabler for growth, innovation and competitiveness of the European economy and corporates. This objective should be reflected by making competitiveness a central factor in the EU’s rule-making process, by truly creating deeper European capital markets that support a wider range of funding options, by ensuring that the regulatory framework supports the ability of market participants to deploy their activities abroad and by creating greater funding flexibility in the existing financial sector frameworks.
- Cyber Security Challenges: The fight against cybercrime needs to be organised at a global level. A common framework for collecting cyber loss data should be created to help analyse aggregated information and provide deeper insights into cyber risks to enable both the private sector and government to close vulnerabilities.
- Sustainable Finance / Climate Change: The regulatory framework for sustainable finance needs to be constructed in such a way that it allows banks and insurers to contribute to funding the transition to a net zero economy, rather than imposing a significant compliance burden to the extent that it constrains investment and creates confusion among investors.