Published by Global Banking & Finance Review®
Posted on October 17, 2025
2 min readLast updated: January 21, 2026
Europe's fragmented regulations hinder investment, says German banking head. A unified capital market is needed to attract foreign capital.
By Christian Kraemer and Maria Martinez
WASHINGTON (Reuters) -International investors have shown renewed interest in Germany at this week's IMF meetings in Washington, but Europe's fragmented regulatory framework is holding them back, the head of the Association of German Banks told Reuters.
"Many are holding back because Europe is still a patchwork of different national regulations," Heiner Herkenhoff said in an interview on the sidelines of the International Monetary Fund gathering. "We urgently need to address this."
He called for a unified and liquid capital market in Europe. "Unfortunately, we've been working on that for far too long already," Herkenhoff said.
INVESTORS' INTEREST IN GERMANY ON THE RISE
International investors are showing more interest in Germany following the new government's announcement of a 500 billion euro ($585 billion) infrastructure fund to modernise the country.
"There is momentum that we should seize," Herkenhoff said.
Reviving growth in Europe's largest economy is Chancellor Friedrich Merz's top priority after two years of economic contraction. The government says Germany needs to attract more private capital to complement the surge in public spending, making it crucial to improve Germany's appeal to investors.
The number of foreign investments in Germany fell in 2024 for the third year in a row.
Finance Minister Lars Klingbeil met around 50 investors on Thursday in Washington at an event hosted by the British bank Barclays. Amid heightened global uncertainty and rising U.S. protectionism, Berlin is seeking to position Germany as a safe, predictable destination for investors.
Investments in climate protection, renewable energy, defence and artificial intelligence are particularly in demand, Herkenhoff said.
Securitisations, in which loans are bundled together and then sold, could also help attract investors. However, Herkenhoff said the most recent proposals from the European Commission in this area were complex.
"It is also important that capital requirements are not further tightened - otherwise demand would drop significantly," Herkenhoff said.
($1 = 0.8540 euros)
(Reporting by Christian Kraemer. Writing by Maria Martinez. Editing by Friederike Heine and Mark Potter)
A regulatory framework refers to the set of rules, guidelines, and practices that govern financial markets and institutions, ensuring compliance and stability.
Foreign investment occurs when individuals or entities from one country invest in assets or businesses in another country, often to gain returns or strategic advantages.
A capital market is a financial market where long-term debt or equity-backed securities are bought and sold, facilitating the raising of capital for businesses.
An infrastructure fund is an investment vehicle that focuses on investing in infrastructure projects, such as transportation, utilities, and energy, aiming for stable returns.
Investor interest refers to the level of attention and desire from investors to invest in a particular market, asset, or opportunity based on its potential returns.
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