BRUSSELS ― The European Commission wants EU governments to provide citizens with simple and transparent digital accounts for investing their savings, and to change tax rules to boost investments, according to a recommendation unveiled Tuesday.

This is an existential challenge for the European Union, which has record levels of savings ensconced in citizens’ bank accounts but is unable to put that money to work providing necessary capital to its businesses, as its global rivals are doing.

“We actually want to develop the European economy so that we can guarantee that our welfare state continues to function well — but that requires economic growth,” European Financial Services Commissioner Maria Luís Albuquerque told journalists, including POLITICO, on Tuesday.

She added: “This is all about economic growth, about making it so that every person, every company, wherever in Europe, actually has the same opportunities … This is the European dream.”

The Commission recommends applying tax breaks and other fiscal incentives — the best that exist under each country’s national laws — to investing in bonds, stocks and funds.

Theoretically, the initiative could motivate citizens to move part of the deposits they hold in banks to investments with higher returns in the long term. Ideally, a government would make the investment offering as competitive as its own government debt. Such investments are usually seen as safer and essential for highly indebted states, but do not boost capital to businesses — at least, not directly.

Yet the Commission has very little power to turn these ideas into reality.

“This is a member state competence, clearly,” said Albuquerque. “We will monitor developments, and we will also be using the European semester to monitor how this is evolving,” she said, referring to the main tool the Commission uses to oversee countries’ fiscal policies.

“This is not the kind of project that you can impose top-down,” Albuquerque said. “This has to have the buy-in of everyone involved.”

The Commission recommends that products that are too complex or too risky, such as crypto-assets, be excluded; and that no geographical restrictions, such as a European preference, are imposed.

However, a recurring concern among financial firms and governments is that American financial companies will take advantage of any such change.

Stéphane Boujnah, CEO of pan-European stock exchange Euronext, said that foreign financial players are looking “with gluttony at the European open bar.”

This summer, seven European countries — led by France — launched a European label for investment products with at least 70 percent of their portfolio assets invested in European companies.

Speaking of the initiative, Albuquerque said: “We have no evidence if that works.”

She added: “Having no geographical restrictions and having interesting tax incentives genuinely lead to a good outcome, and that good outcome translates into people having more opportunities.”

However, the financial services chief acknowledged there is a natural domestic bias when it comes to people choosing investment opportunities. “Diversification is important as a risk management tool … people should invest in different sectors, in different areas, and in different geographies,” she said. “But there is naturally a domestic bias, because we prefer to invest in what we know best, and typically we know best what is closer to us,” Albuquerque pointed out.

The commissioner said that EU financial firms as well have a role to play to ensure they get the most from the initiative. The financial sector needs to “come up to the challenge. We also need our markets to be developed. We also need more products,” she added. Obviously, it is up to investors to decide if they want to offer made-in-EU products.