Call for Investment Reforms in Europe: Insights from Deutsche Börse’s CEO
Stephan Leithner, the chief executive of Deutsche Börse, has emphasized the critical need for a significant shift in Europe’s investment landscape. As the head of Germany’s stock exchange, Leithner believes that the current momentum in European stock markets presents a valuable opportunity for long-term investments. He urges that EU leaders take decisive action to foster domestic investment as international investors increasingly pivot to the region.
Seizing the Moment
During a discussion with the Financial Times, Leithner remarked on the transformation within Europe’s investment environment. Following a surge in the region’s stock performance, particularly the Dax index—which has recorded a rise of 14.8% this year—he indicated that the EU must capitalize on the current shift away from US equities. This shift, he noted, is partly due to rising concerns over US tariffs and their economic implications.
“Many small things have been done but the big bang moment was missing,” Leithner stated, stressing that the conditions are ripe for significant reforms. “It’s now a moment for a big bang . . . the sense of urgency is there.”
Investment Challenges in Europe
Despite the favorable climate for investments, Leithner acknowledged the ongoing challenges within the EU’s capital markets. Previous attempts to create a cohesive capital markets union have faced resistance from smaller member states, which fear losing regulatory autonomy. This fragmentation has hindered the ability to attract more domestic and foreign funds into European companies.
The Case for Reforms
- Leithner mentioned an estimated €11 trillion of “totally unproductive” cash currently stagnating in European savings accounts, emphasizing the need for this capital to be redirected into the stock market.
- He called for reforms in the savings and pension systems, suggesting the introduction of investment vehicles akin to the US 401(k) plans to encourage equity investing.
- Tax incentives could also play a critical role in fostering a culture of investment among European savers.
Germany’s Economic Strategy
The German government’s upcoming spending initiatives reflect a broader commitment to energizing the economy. Plans proposed by Friedrich Merz, the chancellor-in-waiting, include the establishment of a €500 billion infrastructure fund and potential changes to debt limits for defense funding. Leithner believes these plans signal a clear shift towards enhancing investment conditions.
Future Opportunities
Looking ahead, Leithner highlighted potential growth avenues for Deutsche Börse itself, revealing aspirations for a public listing of ISS Stoxx, the company’s corporate governance unit in which it holds an 80% stake. He reaffirmed that should this IPO proceed, Frankfurt would be the intended location.
In summary, Leithner’s insights sketch a compelling framework for how Europe can revitalize its investment climate amid shifting market dynamics. By capitalizing on current trends and initiating substantial reforms, the EU has an opportunity to increase its investment appeal significantly.
