Karel Baert: ​“Yes to regulation, as long as it addresses the actual challenges the market faces.”

This article is based on the speech given by Karel Baert, CEO of Febelfin, during the Belgian Financial Forum event on the Savings and Investments Union (Brussels, 24 October 2025).

It was one of the founding fathers of the European Union, the Belgian politician Paul Henri Spaak, who said: “There are only two kinds of states in Europe: small states, and small states that have not yet realized they are small”. Spaak wanted to underline the necessity of European cooperation and integration and that no single country can address today’s challenges alone.

Having served the financial sector in different countries throughout my career, I see both the opportunities and the challenges that Europe faces in building integrated capital markets. We often refer to the word fragmentation, and by this we mean the very different legal, regulatory, supervisory and fiscal frameworks we find in Europe. This kind of fragmentation remains a real barrier for investors and companies, leading to higher costs and missed opportunities.

If we want Europe to compete globally and support growth, innovation, and the green, digital and also defence transitions, we need to break down these barriers. And let’s not forget the role of regulation. Because this is what it seems to come down to today: simplifying regulation, quickly followed by the mention that nobody wants deregulation.

Over the last couple of years, important work has been done to improve EU capital markets. The Listing Act was a step in the right direction towards simplification before the concept of simplification was even on the EU agenda. The recent European Commission’s proposal on securitisation, though not as far-reaching as we hoped for, continues along this path. This is all good news, but it also means that most low hanging fruit has already been tackled.

The only way to really move forward is by changing the general perception of the financial sector. We must, all together, and in a credible way, convince our stakeholders, not in the  least the general public, that our sector is essential to create economic growth and prosperity.

At the same time, Europe must urgently address its low-risk appetite and cautious attitude towards investing, which continues to lag behind the United States and other continents. Improving this mindset is essential for fostering a more dynamic investment culture. To achieve this, we should place a strong emphasis on financial education—empowering citizens and investors with the knowledge and confidence to participate actively in capital markets. By raising financial literacy, we can encourage responsible risk-taking and support the growth and resilience of European capital markets.

You cannot build strong capital markets without a strong investment culture and strong financial institutions — the three must go hand in hand. Whether you give the Commission and the ESA’s a competitiveness mandate won’t matter unless there is a change of mentality.

To achieve the goals of the SIU, we look towards the EU for a principle-based regulatory foundation that serves as an enabler, instead of an obstruction.

Let’s be realistic, a steady flow of recommendations, communications, and strategies may look like progress, but soft law alone will not deliver. Why? Because business cannot rely on it and cannot scale if it is based on guidance that shifts with each political cycle. We need binding long-term commitments and measurable outcomes. And in this context, I specifically look at the role of the Member States, and thus Belgium, to make a clear commitment to delivering on the objectives of the Savings and Investments Union. The time to act is now.

So, yes to regulation, but regulation that addresses the actual challenges the market faces. Challenges that should be addressed by means of a single rulebook, better coordination between different levels of policymakers and supervisory authorities. It goes without saying that the previous points should not come with a deterioration of investor protection, market transparency and financial stability.