Titled "Financing Growth and Innovation in Europe: Economic and Policy Challenges", the two-day event brought together leading academics, policymakers, and industry professionals to discuss strategies for strengthening Europe’s financial system and fostering innovation amid global challenges.
The ability of the financial system to support innovation and firms with high-growth potential through risk capital and alternative private debt instruments remains crucial for Europe's economic progress. However, capital markets in Europe remain fragmented and significantly smaller than those in the United States. This means that Europe’s goals of expanding funding for innovation and increasing the depth and integration of its capital markets (e.g., the Savings and Investment Union) are deeply interconnected.
Key discussions and insights
Inspired by the Draghi and Letta reports, the conference deep-dived on the features and challenges of Europe’s innovation ecosystem and its financing gap. The first day highlighted how, despite the lag from the United States, European innovation has developed significantly in the last two decades and holds clear potential. Presentations and discussions pointed to the need for further exposure by long-term institutional investors, in particular pension funds and insurances, as the key to unlocking this potential.
Professor Josh Lerner of Harvard Business School delivered a keynote reflecting on the main lessons Europe can learn from the role of private equity and venture capital markets in the United States and the role of public policy in fostering them.
The second day brought together top management of Europe’s public banks and promotional institutions, who stressed the delicate role they play in promoting private markets while meeting public policy priorities. It emerged that the role of public funds should be temporary but that Europe’s current innovation challenges in this field will require them to continue designing, monitoring, and scaling new financial instruments to match quickly evolving needs. The conference ended with a discussion of the non-financial barriers European innovators face. It highlighted how market and regulatory fragmentation currently represents a real obstacle to an efficient and truly European market for innovation and how this should be an area of priority for the new Commission.
Strengthening European financial cooperation
The FBF Annual Conference also provided the setting for Cassa Depositi e Prestiti (CDP) and Instituto de Crédito Oficial (ICO) to formalise an important Memorandum of Understanding. This agreement aims to advance social housing, support SMEs, and enhance European cooperation in financial markets, contributing to a more integrated and resilient financial landscape.
Looking ahead
The FBF Annual Conference 2025 provided a unique platform for examining Europe’s financial future, bringing into the same room a diverse group of stakeholders. The Florence School of Banking and Finance remains committed to fostering high-level dialogue and driving forward discussions that contribute to Europe’s financial and economic advancement.