The final report of the European Commission study on improving the take-up and effectiveness of financial instruments has now been published.
Commissioned by DG Regio and conducted by EPRC, the research focuses on: identifying the rationale for using FIs within Cohesion policy programmes; providing a ‘stocktake’ of how EU Member States are making use of FIs in 2014-20; identifying the issues which influence uptake of FIs; and analysing complementarities and interaction between Cohesion-policy funded FIs and other sources of funding such as the European Fund for Strategic Investments.
The study found that the supply side for investment is complex, with the boundaries between public and private often blurred. The overall landscape varies widely between countries, but is characterised by the growing importance of national promotional banks (NPBs) in economic development. Carefully calibrated financial instruments, often provided through NPBs, can provide sustainable support for revenuegenerating / saving projects in areas like SME support, R&D&I and energy efficiency where market imperfections result in suboptimal levels of investment. The uptake of ESI Fund co-financed FIs has increased in 2014-20, but remains focused on loan-based SME support. The regulatory framework for ESIF co-financed FIs has improved, especially through mandatory ex ante assessments, but the implementation of FIs remains challenging for Managing Authorities, suggesting that more timely guidance, more stable rules, and perhaps more ‘off-the-shelf’ instruments would be beneficial. However, the plethora of initiatives at domestic and European levels can make the FI ‘scene’ difficult to decipher and quantify. Related, there is evidence of policy competition, pointing to the need to rationalise modes of intervention and tailor FIs to the relevant institutional and economic context.
The full report is available here.