Luxembourg’s role as a major European financial centre stands to grow significantly under a more integrated capital markets union (CMU), remarked , client relationship director at IQ-EQ Luxembourg. In an interview with Paperjam, Tisescu argued that “a more integrated European capital market, with harmonised regulations and streamlined cross-border investments, presents a tremendous opportunity for Luxembourg to attract an even broader pool of international capital.”

Tisescu further elaborated on the CMU’s potential, describing it as “an initiative by the European Commission to create a single, integrated market for capital that ensures European markets remain attractive, efficient, and globally competitive.” She noted that, historically, European companies have relied on bank financing, but the CMU now promotes “alternative avenues such as equity markets, venture capital, and crowdfunding,” which she believes offer “businesses more resilient funding options, making it easier to access finance and contributing to economic growth.”

The CMU’s key objectives

According to Tisescu, the CMU’s main objectives are to eliminate barriers to cross-border capital flows, diversify funding sources beyond bank loans, enhance access to capital for small and medium-sized enterprises (SMEs) and startups, and increase the attractiveness of European capital markets. “For investors, the CMU could bring more investment opportunities across the EU, increasing diversification and access to high-growth sectors,” she said. “More transparent and standardised regulations also help reduce investment risks and improve returns.”

Why the CMU struggled

Despite broad support for the CMU’s goals, its implementation has lagged. Tisescu acknowledged that “the CMU has struggled to gain momentum, it’s true.” She identified several critical barriers to progress, starting with divergent legal and regulatory regimes. “Varying legal and regulatory frameworks across EU countries create inconsistencies in financial regulations, tax policies and insolvency laws, making cross-border investment difficult.”

She also pointed to Europe’s persistent dependence on bank financing, particularly amongst smaller businesses. “Europe’s entrenched reliance on bank financing, especially among SMEs, has slowed the development of alternative funding sources.” On Brexit, she remarked that “Brexit’s impact also can’t be understated, given it marked the loss of one of Europe's key financial hubs.”

National politics and market fragmentation

Regulatory divergence remains a formidable barrier to the CMU’s realisation. “Another major hurdle is the resistance from national authorities who are understandably cautious about ceding regulatory autonomy,” Tisescu said, adding national politics have also slowed progress, “many governments hesitate to give up regulatory control, delaying much-needed structural reforms to harmonise the market.”

She also highlighted the impact of inconsistent investor protections. “Varying investor protection mechanisms and disclosure requirements contribute to a fragmented landscape. This inconsistency not only hampers cross-border investment but also affects market transparency and investor confidence.”

Draghi’s reform model

Recalling former European Central Bank president Mario Draghi’s “” stance, Tisescu felt that Draghi “not only stabilised the euro but also sent a strong message of unity and resolve across the continent.” Moreover, she said his “ability to blend bold, unconventional monetary policies with a calm, measured style instils confidence in markets and policymakers alike.” Reflecting on his current role in shaping policy, she noted that “his strategy is focused on deeper financial integration, enhanced market stability, and encouraging structural reforms across member states.” Whilest acknowledging that challenges remain, she concluded that “his track record and commitment bode well for a more unified and resilient European capital market.”

Regulatory alignment

Tisescu underlined that harmonising regulations across the EU must be a top priority. “First and foremost, regulatory frameworks across Europe must be harmonised,” she said. “Aligning financial rules, tax policies and insolvency laws will help eliminate barriers to cross-border investment, fostering a more integrated and secure financial environment.”

She stressed the need to move away from dependence on bank lending and to “encourage the growth of non-bank funding sources through targeted incentives.” Investor protection also requires improvement: “Strengthening transparency, standardising investor protections, and ensuring clear, consistent documentation will reduce fragmentation and encourage greater cross-border activity.”

Tisescu warned that progress would be impossible without strong commitment from EU leaders. “None of these efforts will succeed without strong political and institutional commitment,” she said. “Only through sustained dedication to integration can the CMU reach its full potential, creating a truly unified and dynamic European capital market.”

Luxembourg’s financial sector

“Having observed Luxembourg’s financial prowess from afar, and now having lived here for five years, I appreciate the unique position our country holds,” she said. She described a unified capital market as “a tremendous opportunity for Luxembourg to attract an even broader pool of international capital.” She added, “Local businesses would benefit from diverse funding sources beyond traditional bank loans; I’ve seen firsthand how this diversification can drive growth and stability, in turn reinforcing Luxembourg’s reputation as a dynamic financial hub.”

She also highlighted the operational efficiency that harmonised regulation could bring: “With a unified regulatory framework, the operational barriers we currently face would be reduced, allowing our institutions to operate more efficiently and remain competitive on a global scale.” Tisescu concluded that “deeper integration isn't just about market mechanics--it’s about securing a vibrant and resilient financial future for Luxembourg, a country I’ve grown to love both professionally and personally.”

Tisescu stated that “by removing barriers and fragmentation, a stronger CMU creates a more integrated and resilient financial ecosystem--paving the way for a more dynamic and prosperous European investment landscape.” Institutional investors, she said, would benefit from “access to a larger, more liquid market with harmonised rules that reduce the administrative and compliance costs associated with navigating multiple national regulatory frameworks.”