A Fragmented Continent: ECB Vice President Advocates for the Single Market Integration as EU Struggles with Economic Growth

European savings increasingly fund US companies.

The European Union’s (EU) entire mission was to create a single market where goods and services could flow seamlessly between member states, unhindered by regulations and rules. While the mission was grand and the vision sound, the dream has fallen short. Today, Brussels is known for creating obstacles, mostly from unelected bureaucrats, while seeking to protect cronies or idiosyncrasies without any concern for any harm being done.

It is a fact that the EU is home to a larger population than the United States, but economic growth has faltered to the point that Europe is being left behind. You cannot simply create more rules and regulations or hold meetings and conferences to address this shortcoming. Meanwhile, riots and looting are taking place as the population looks for a solution to a problem that few seem willing to address beyond platitudes.

The Draghi Report (Part 1, Part 2), headlined by the former ECB President Mario Draghi, outlined the issues, and European leadership said what was expected, but I am certain Draghi is still losing sleep as the European vision falters.

Earlier this week, Boris Vujčić, Croatian economist and Vice-President of the ECB, took the podium to tell the audience that a “truly single market” is an “untapped strength.” He explained:

“Today, fragmentation prevents us from realizing our European potential. Too often, national rules, standards and procedures diverge, forcing companies to navigate multiple legal and regulatory regimes when they operate across borders. These differences act like internal tariffs: according to ECB estimates, they are equivalent to a tariff of around 67% for goods and 95% for services. While this is the upper bound of estimates, the message is clear: doing business across borders within the Single Market is expensive.”

Vujčić says that “friction” between European markets means they are “integrating faster with the United States than with each other.”

European funds increasingly back US companies as European markets remain underdeveloped. Limited access to capital and the robust venture capital ecosystem beyond Europe mean it is “likely that successful European start-ups move their headquarters or intellectual property abroad, or choose to list outside the EU.” This is a big problem.

Marius Jurgilas, founder and CEO at Axiology, a European digital securities marketplace, concurs with Vujčić. He says better-connected European capital markets could offer investors and businesses a wider choice of funding options and investments. Anecdotally, Jurgilas provides one example of the dysfunction.

“Take an Estonian company looking to issue a bond to eligible investors in Spain. Where brokers and settlement providers keep separate transaction records, they have to check those records against each other and resolve discrepancies. For a smaller company, that extra work and cost can determine whether a bond issue is worth pursuing at all. Shared, regulated infrastructure for issuance, trading and settlement can reduce that duplicated work and the number of operational handoffs between institutions. That means less administration for banks and brokers and potentially lower costs for issuers. Pontes addresses another important part of the problem, connecting digital securities settlement with wholesale central-bank money so that delivery and payment can be synchronized.”

But even if processes are rationalized, and regulations become similar across the EU, taxes and local rules can and will get in the way. Europe must make risk capital appealing, wealth not evil and prosperity a goal.

“…regulators must make rules more consistent if European capital markets are to become truly integrated.”

Meanwhile, Draghi has continued pursuing economic reality, joining with the founder of Stripe earlier this year to create the Rhine Group to advocate for change along the lines of his report, the implementation of which is widely viewed as having stalled.

 

 



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YTD: Jan 1, 2026 - Nov 5, 2026 vs Jan 1, 2025 - Nov 5, 2025

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