Johan Van Overtveldt calls for stronger efforts to safeguard financial stability in the EU

The European Union is at a critical juncture. Geopolitical tensions, volatile markets, and deep-rooted economic challenges are placing growing pressure on the financial system. Johan Van Overtveldt, rapporteur for the European Parliament on behalf of the Committee on Economic and Monetary Affairs (ECON), has presented his draft report aimed at securing and strengthening Europe’s financial stability.

“Financial stability is not a given,” Van Overtveldt warns. “It demands vigilance, solid rules, and the ability to respond swiftly when risks emerge.”

Tackling key risks and pushing for necessary reforms

The report highlights several risk factors that could undermine European stability: high levels of public debt, inflated market valuations, cyber threats, and the expanding role of non-bank financial institutions—the so-called shadow banking sector.

This sector now accounts for more than 40% of Europe’s financial assets. “As financing increasingly moves outside the traditional banking system, our regulatory oversight must adapt,” Van Overtveldt stresses. “Poorly regulated actors must not be allowed to create systemic risk.”

The report also calls for the full implementation of the Basel rules, stronger crisis management tools, and a reform of money market funds in line with international best practices.

Deeper capital markets integration—with proper oversight

Van Overtveldt emphasizes that further integration of European capital markets is essential to boost investment and enhance Competitiveness The extent to which companies in one country can compete with similar companies in another country. A law came into force in Belgium in 1996 to monitor competitiveness. This stipulates that Belgian salaries may not evolve faster than the average of those in the three neighbouring countries. The Central Economic Council (CEC) performs an annual measurement to see if the objectives have been obtained. competitiveness .

But he also urges caution: “A strong capital markets union is vital for growth and innovation, but integration must go hand in hand with robust supervision. Competitiveness and stability go hand in hand.”

He welcomes the strategic insights provided in the reports by Mario Draghi and Enrico Letta, but insists that political ambition must be matched by sound risk management.

Time for Europe to act

The report issues a clear call to European institutions to:

• reinforce systemic oversight of both banks and non-bank entities;
• address hidden leverage risks and regulatory arbitrage;
• improve supervisory data and stress-testing capacity;
• strengthen defences against cyber and hybrid threats;
• deepen international cooperation, including with the International Monetary Fund ( IMF The International Monetary Fund (IMF), established in 1945, focuses on monetary issues. The global organisation is governed by and accountable to the 188 member countries. In addition to financial stability, monetary cooperation and international trade, the IMF promotes and supports employment, sustainable economic growth and combating poverty. In this regard, it provides loans, technical assistance, specialised training courses and advice to governments. It also monitors financial trends. IMF ) and the Financial Stability Board (FSB).

“We must not allow new financial vulnerabilities to pile up before our eyes,” Van Overtveldt concludes. “Europe’s strength depends on our willingness to anticipate, identify risks, and act in time.”

The draft report has been approved by the ECON Committee and will be put to a vote in the full European Parliament at a later stage.