Ireland's Makhlouf Urges True Single Market for Europe's Savings

Governor Gabriel Makhlouf of the Central Bank of Ireland has urged European policymakers to ask what a genuinely barrier-free Single Market can do for Europe's savings and investments. Speaking at the Eurofi High Level Seminar on March 27, 2026—delivered online after the in-person event in Nicosia was moved online—Makhlouf argued that mobilising Europe's savings requires an economy that is productive and innovative and operates as a genuine Single Market.

Makhlouf pointed to Europe's substantial savings, with euro area households holding deposits nearing €10 trillion, fueled by savings rates around 15 percent—still elevated above pre-COVID levels. "A significant proportion of those savings continues to be invested outside the European Union," he noted, posing a fundamental question: "Why those returns are perceived to be higher outside Europe, and what we can do about it?" His answer cuts to the core: "Fundamentally, it comes back to the performance of the real economy."

SAVINGS SURPLUS, INVESTMENT GAP

Yet investment, particularly through European capital markets, has not kept pace, he said, noting that only one-fifth of euro area household wealth is held in financial assets. Channelling a proportion of those savings into investment would go some way to helping the EU meet its investment needs, estimated at an additional €750-800 billion annually by 2030, he said.

Echoing the paradox of thrift, he noted that while saving is prudent for individuals, at the macro level it can dampen demand and constrain growth if not channelled into investment. He described Europe as being in a "curious position", with households and institutions collectively holding substantial savings.

SINGLE MARKET'S UNTAPPED POWER

Beyond a stable macroeconomic framework, Makhlouf said policymakers should focus on the structural conditions that support growth, starting with the Single Market. "The Single Market remains our most powerful and underutilised asset," he declared. "Significant barriers remain, particularly in services. Removing those barriers would not only boost productivity directly; it would also enable a step change in the development of Europe’s capital markets."

His vision demands a multi-pronged push: strengthening growth prospects, completing the Single Market, building integrated capital markets, and preserving Europe's macroeconomic stability. Capital, he said, "will always seek out the greatest potential returns."

Makhlouf summed up his main message: "Don’t ask only what the Savings and Investments Union can do for you; ask what a genuinely barrier-free Single Market can do for Europe’s savings and investments." The EU's Savings and Investments Union (SIU), launched by the European Commission in March 2025, aims to link savings to productive uses and simplify regulations. Yet Makhlouf cautioned its limits: "Financial market reforms cannot substitute for real economy performance." He also called for stronger retail participation in capital markets, including through pension reform, and continued efforts to reduce market fragmentation.

CALL FOR EUROPEAN SAFE ASSET

Makhlouf said European policymakers need to give serious consideration to whether now is the right time to pursue a European safe asset that could anchor institutional capital, adding that in his view the answer is an unambiguous 'yes'. He called a European safe asset "an important counter to European savings and capital being drawn towards alternatives." Supervisory convergence matters, he added, but "it is not the defining feature of a successful capital market. What matters more are deep and liquid markets, supported by strong economic growth and a large supply of high-quality assets."

His speech was titled "Bridge to the Future: Mobilising Europe's Savings in a Fragmenting World."

PATH TO PROSPERITY

Makhlouf set out his main message: "Mobilising Europe’s savings requires us to ensure that our economy is productive and innovative and operates as a genuine Single Market, creating the prosperity that generates capital, that supports the longer-term wellbeing of Europe’s citizens." If Europe does these things, he said, European savings "will not need to be persuaded to stay."

In a more fragmented world, he said, capital will increasingly flow to economies that offer not only stability but also opportunity. "By harnessing our Single Market alongside our international openness, outlook and leadership and by building a Savings to Investments Bridge," Makhlouf concluded, "we can ensure that Europe’s economic future is not only secure but strong."