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(Bloomberg) — The EU could consider moving forward with a “coalition of the willing” and not wait for all 27 members to agree on a capital markets union as it tries to break a deadlock in its decade-old plan and finance a nearly trillion-euro investment gap, the bloc’s financial services chief said. 

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In her first interview as commissioner for financial services, Maria Luis Albuquerque said it’s preferable to have all member states join the initiative, but she is open to alternatives on issues where agreement is elusive.

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“What I’m saying is that there can be associations of different member states,” she said. “They can group and promote this and find the best solutions. But the point is, will we be waiting for every single one to develop their own capital markets? It hasn’t happened.”

Her comments mark a significant departure from the path the EU has trodden for the last decade, as it sought full agreement on efforts to lower national barriers and create vibrant capital markets offering funding to companies and returns to savers across the EU. 

Progress has been slow, as member states clashed over issues like single supervision or taxation, even while politicians warned that the demands of the green transition made the project more pressing. A series of reports last year gave the project fresh impetus, including one from former European Central Bank President Mario Draghi, who warned that the EU itself was at risk without more funding. 

Finance firms, meanwhile, have intensified their push for reforms like loosening the rules around securitizations, measures that could boost bank lending and generate healthy fees and commissions for arrangers of deals. 

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“We currently have about €11 trillion in bank accounts,” Albuquerque said of the potential prize for Europe. “Even if a small part of that amount can be put to work into capital markets, namely on equity, this makes a huge difference for the ability of our corporates to get the equity they need.”

A “coalition of the willing” could work on areas like how to grow Europe’s retail investment market or aligning tax treatments for cross-border investments. “I don’t want to preempt such discussions,” she added. “What I am saying is we can look at these types of solutions.” 

Big countries including France and Spain have been pushing for smaller circles to break some of the stalemates, including proposals by Madrid for sandboxes to try new ideas.

‘Question of Scale’

Those proposals spooked some smaller member states, which feared that consolidation between big economies could draw liquidity from their less developed capital markets.

“Why aren’t smaller countries also willing to do this and join the big countries?” said Albuquerque. “You cannot develop a capital market if you don’t have enough liquidity, if you don’t have enough market participants. It is a question of scale.

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Member states wouldn’t need authorization from the European Commission if some governments want to launch such initiatives. But Albuquerque said she would like to be involved to ensure that any potential moves don’t create additional barriers that would prevent others from joining.

The bloc’s executive arm is due to set out its priorities for the savings and investment union in the “next couple of months,” which will give more details on the way forward, Albuquerque said. 

A decade after launching its push for a single finance market, the EU is showing fresh divisions in areas beyond capital markets. 

Unicredit SpA’s bid for Commerzbank AG, which is being fiercely resisted by the German bank and its government, is one such example. 

“It is a natural consequence of banking union to see cross-border mergers,” Albuquerque said in an interview on Bloomberg TV. “We need to understand that bigger banks can provide better services at lower cost. If we have bigger banks operating cross border, it will be to the benefit of all clients.”

Another rupture is the EU’s broad approach to financial regulation, just as President Donald Trump is setting off a wave of deregulation in the US. Those concerns have prompted countries including France, Germany and Italy to call on the EU to revisit some of its rules. 

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“They are big important countries but there’s 27 of us, so I will have to listen to everyone,” she said. “There are very few issues where we all see things from exactly the same perspective. Banking is not one of those.” 

Albuquerque said her perspective is that “there is clearly a need to have better regulation, simpler regulation, to reduce the burden that it imposes on companies” and preserve a“level playing field for the EU’s banks and global peers. 

“We will not engage in a race to the bottom,” she said. “Financial stability is way too important to risk.”

The EU’s so-called Competitiveness Compass, which is being released Wednesday, aims to set out a guide for the next five years to compete with the likes of the US and China. 

It includes proposals to cut regulation, improve access to funding, lower energy costs and mitigate dependencies linked to critical materials, Bloomberg previously reported. The goal is to implement many of Draghi’s recommendations.

—With assistance from Max Ramsay and Oliver Crook.

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