European Investment Bank What Contributions to the Solution of the Crisis from the EIB Group? Debora Revoltella Director Economics Department European Investment Bank

European Investment Bank Outline Economic divergence in Europe What has been done and what needs to be done? Role of the EIB Group Conclusions

European Investment Bank Outline

European Investment Bank Very different economic prospects among countries GDP per capita 2011 vs 2008GDP growth (avg)Per capital GDP Euro, 2011

European Investment Bank Clear divergence in terms of cost of risk (and cost of funding) Source: Datastream 10-year benchmark bond yields (in %)

European Investment Bank Outline

European Investment Bank What has been done? Financial Support programs in Greece, Ireland, Portugal Greek PSI Structural reforms all across the EU Periphery ECB and EBA ESFS and ESM EU institutional development, including the Fiscal Compact and work in progress towards more fiscal discipline

European Investment Bank What needs to be done? Implementation of the structural reform in the periphery Greek dilemma Banks Sovereign-banks nexus Pan-European regulation, supervision, resolution, safety net Re-start growth Create an environment for investment (sovereign / bank crisis) Public policies for investment (with long term goals as drivers) Fiscal and structural policies (growth friendly public expenditure, investment friendly tax system, proper structural policies to allow economic dynamism)

European Investment Bank Outline

European Investment Bank 18/03/ /03/2016 EIB contribution in the crisis context Gradual return to pre-2008 signature volumes to protect EIB traditional business model and high-standard credit quality, but the proposed capital increase might change the situation

European Investment Bank 16/02/ European Investment Bank Group Loans Guarantees Equity participation Combining EIB loans and EU grants Leveraging EU and Member States budget resources Strong in-house expertise Technical and financial advice Technical assistance initiatives The EIB – The EU bank LENDING BLENDINGADVISING

European Investment Bank 18/03/ Preserving the EIB group support to the real economy Viable projects for long term growth, with potential frontloading for more short term effects Better targeting of strategies EU periphery – to support macroeconomic rebalancing and export oriented sectors Core-Europe – towards more value added activities Areas of expertise remain: Infrastructure, R&DI, SMEs, Climate action Potential new focus to address clear bottlenecks due to the crisis (Trade Finance)

European Investment Bank 18/03/ Preserving the EIB group support to the real economy Infrastructure Projects with long term effects, potentially being frontloaded TENs and Broadband Projects in the EU periphery to support macroeconomic adjustment (export) and in NMSs to address existing bottlenecks Consider increasing the share of EIB financing R&DI Direct companies financing (potentially expanding scope) Human capital and education Venture capital, Risk sharing mechanisms

European Investment Bank 18/03/ Preserving the EIB group support to the real economy SMEs – via banks, with clear constraints Climate action Trade Finance Using EU Funds as first loss guarantee Project Bonds With new instruments for risk sharing or leveraging

European Investment Bank Outline

European Investment Bank Conclusion European economic situation remains challenging Steps have been taken, but more Europe is needed Restarting growth is imperative The EIB can play a role