Geopolitical turmoil is increasing global fragmentation but could be a driving force for European consolidation, according to speakers at ICMA’s 2026 AGM and Conference in London. At the same time, there is a growing demand for diversification as the geopolitical pressure cooker heats up – and Europe could be a welcome alternative to the US.
“Eurobonds were seen as a very traditional investment, and were quite a sleepy market” said Valerie Urbain, CEO of international central securities depositary (ICSD) Euroclear. “New issues have risen 100% in the last year.”
Megadeals from US juggernauts like Alphabet have seen the reverse yankee market, with US issuers offering euro-denominated bonds, skyrocket, as issuers look for new pools of investors and new currency opportunities. In May, the firm issued €9 billion.
READ MORE: Alphabet plans yen-denominated issuance
Despite the excitement around the issuance, however, it would be a drop in the pond for the still-dominant US bond market, panellists argued – European markets have a long way to go.
“The hegemony of US Treasuries is still alive and well, but there’s an argument that the dollar will weaken over the long term,” argued Patrick Thomson, EMEA CEO of JP Morgan Asset Management. “Europe has a great opportunity to be a safe harbour for assets,” he added. “I’m pretty optimistic on the direction of travel.”
That is, provided that reforms are successful, he said. The European Union’s Savings and Investments Union (SIU) is a key factor here, with the planned mobilisation of €10 trillion in household savings into capital markets and, if all goes to plan, a subsequently more competitive market on the global stage.
Fragmentation
“We talk a lot about fragmentation, but at the same time we, as a CSD, need to make sure that we provide global coverage with lots of interoperability to ease the flows of capital,” Urbain noted.
Jakub Michalik, chief policy officer at Euronext, emphasised the benefits of the potential single supervisor across the bloc, as discussed in the EU’s Market Integration and Supervision Package (MISP).
READ MORE: Centralised European regulation gets tentative thumbs up from market
“There is a clear notion of strengthening integration within Europe, which will be beneficial. Clearly geopolitics will drive global fragmentation, but at least for Europe, it will increase regional integration,” he added.
Bea Martin, group chief operating officer and president of UBS EMEA, warned that while progress is being made, fragmentation in Europe means it remains difficult for investors to navigate, and keeps it behind the US.
“The US is a more investible and unified market,” she said. “Europe is realising that it needs to be more competitive, and it’s trying to work out how to do that. It’s important to work together, and have one voice.”
How Europe can still win
Europe may not be at the forefront of AI, but where it can gain a competitive edge is in green energy and defence, panellists suggested.
“I’m optimistic on cloud computing, which is the next best thing,” Michalik said, while Martin praised Europe’s regulation and guardrail development in the cloud and payments spheres, stating that investors are starting to take note.
“We should focus on what we’re good at rather than trying to be the next US,” argued Souâd Benkredda, group management board member at DZ BANK.
“If we really want to compete with the US we need deeper capital markets, more investors, and more issuers,” Urbain affirmed.
“You can build the best swimming pool, in terms of infrastructure, but if there’s no water you don’t really have a swimming pool. I really urge us to really work also on the demand and the supply of the capital markets.”
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