Venturing into open waters to unlock Europe’s innovative potential

Euronext Paris – Building the Savings and Investments Union for real

Paris, 18 March 2025

Speech by François Villeroy de Galhau, Governor of the Banque de France

Ladies and Gentlemen, dear Stéphane,

I am pleased to attend this birthday celebration: Euronext is 25 years old, only one year younger than the euro. And both are remarkable examples of European success and pride. Yet, to deliver fully, both need to be complemented with greater economic and financial integration. I cannot agree more with what Commissioner Albuquerque just said.

[...]

A competing explanation pointed out by entrepreneur Olivier Coste is that our innovation deficit stems not only from fragmented markets or insufficiently deep and liquid capital markets, but from the cost of failure deriving from overprotection of some stakeholders xiii. Our system could evolve to a more Danish style “flexisecurity”, and improved insolvency law possibly through the 28th regime. Corporate restructuring costs may be up to ten times higher in countries with stronger employment protection legislation xiv – in that case for highly qualified workforce –, such as France or Germany, undermining profitability and competitiveness. This factor especially affects the tech sector, where projects have a greater risk of failure. It discourages venture capital and private equity funds from investing in Europe. 

With a more audacious mindset, investments are also concentrated on high-risk, high-impact projects​​​​​​​ xv. The US and China have built their technological and industrial leadership by channelling capital into bold, transformative ventures, particularly in sectors like AI, biotech, and green energy. By contrast, Europe often favours too incremental innovation, in fairly mature sectors, and excessive fragmentation in its public and private investments xvi, – the so-called “Middle-Technology trap”, stressed among others by Jean Tirole.

[...]

Read the full speech