German initiative to create a single European stock exchange

According to the analysis and translation group of the Stock Information and Education Company and quoted by Euronews, in a situation where European capital markets are facing challenges such as regulatory fragmentation, the exit of successful companies to US exchanges and weakness in financial depth, the idea of ​​creating a single European stock exchange has once again come to the forefront of the attention of economic leaders on the Green Continent.

The initiative, proposed by German Chancellor Friedrich Merz, has also received the support of Euronext, the largest stock exchange in Europe. The aim of this plan is to strengthen competitiveness and attract capital at the European level; however, the path to its realization is accompanied by significant political and regulatory obstacles.

In an interview with Euronews, Stefan Bojna, CEO of Euronext, announced that the company is ready to take steps towards deeper integration of European financial markets in order to provide a broader source of liquidity for the growth of European companies. He stressed that the single capital market would not only facilitate financing for small and medium-sized enterprises, but also reduce regulatory fragmentation and high compliance costs.

Euronext now represents more than 1,700 European companies with a market value of €6.5 trillion and is seeking to play a central role in designing the structure of the single stock exchange. Merz’s remarks in the German Bundestag are seen as a sign of the country’s change of approach towards delegating some of its supervisory powers to ESMA (European Securities and Markets Authority).

Referring to the exit of successful companies such as BioNTech from domestic markets, he stressed that Europe needs a stock exchange of the size and functionality of New York. In this regard, Frankfurt and Paris have also increased their cooperation within the framework of the European Capital Markets Union (CMU) project, a project that began about a decade ago but has made limited progress due to political differences and regulatory differences.

One of the main obstacles to this plan is the fragmentation of financial regulations across EU member states. Euronext has suggested that a single supervisory body, ESMA, could provide more effective oversight and a more comprehensive view of market risks. The European Commission also plans to present a new framework for the supervision of financial institutions, including central securities depositories and cryptocurrency exchanges, by the end of this year.

Analysts warn that the current situation will weaken Europe’s competitiveness against the United States and China. Companies such as Klarna and Heart Aerospace have floated their shares on US exchanges or moved their headquarters outside Europe to reach larger investors.

Euronext believes that by further integrating capital markets, €13 trillion in private savings could be unlocked in Europe, a potential source of huge financial resources for economic growth.

However, some analysts remain skeptical about the success of the plan. Jeremy Pelso, chief strategist at BCA Research, warns that creating a single stock exchange will not necessarily solve the problem of liquidity shortages or the decline in initial public offerings in Europe.

He says that companies will have to choose between national exchanges such as Germany’s DAX or France’s CAC and a single European stock exchange, a decision that could introduce new complexities.

Although the creation of a single European stock exchange still faces regulatory, political and structural challenges, the support of Germany and France could mark the beginning of a new chapter in financial cooperation in Europe. If the plan comes to fruition, the Green Continent could redefine its position as a major global investment hub by reducing its dependence on American and Asian markets.