Accelerating capital market financing
Companies have been shifting from traditional banking products to debt and equity capital market financing to shore up balance sheets. This is even more crucial for small and medium-sized enterprises (SMEs). The EBRD’s focus is on capacity building on local markets to be able to absorb this new supply of securities and on simplifying securities issuing processes to allow corporates & SMEs to tap into equity financing that is also addressed in the EU’s CMU Action Plan.
EBRD annual investment and number of investment projects (2015- Q3 2020)
Adjusting to a new digitalisation regime
The traditional ways of capital allocation are challenged more and more by new fintech solutions such as digital platforms to avoid physical gathering: online start-up platforms; online AGMs & e-voting; virtual IPO roadshows; big data etc. Our aim is to help the local jurisdictions and the market participants to adopt flexibly and easily to a permanently changing world and to build a supportive environment for innovations.
Further expansion of passive and ESG related investments
The EBRD strengthened its efforts to build green capital markets to support environmentally and socially sustainable economic systems as well as to reorient capital flows towards sustainable investment. The CMD team has launched technical cooperation projects to accelerate green bond issuances. It is also working with authorities in Greece, Hungary, Kazakhstan and Mongolia to shape sustainable capital markets strategies. The EBRD is participating in working groups led by the European Commission such as the Platform on Sustainable Finance – and assisting in developing the EU Green Taxonomy, Green Bond Standards & Climate Risk disclosure.
The year 2020 and the Covid-19 pandemic have brought new challenges to the global economy and it is the EBRD’s key priority to support the recovery also with capital market policy initiatives and products. The pandemic highlighted the fact that the EBRD needs to address the funding needs across all tenors, including short-term working capital.
EBRD’s development related exposure by region (EoY 2020)
As banks begin to record crisis-related losses, the gap between supply and demand of credit is widening. Once again, this will bring the need for capital markets into the spotlight. As a potential response to the new challenges, a commercial paper (CP) pilot project has been developed in the Baltic states. It addresses increasing corporate short-term financing needs and establishes a new asset for domestic and international investors.
The EBRD continues to support its countries of operations to create more efficient and self-sustaining financial markets through its Local Currency and Capital Markets Development (LC2) Initiative. In 2019, the LC2 Initiative began implementing its new strategy (2019-2024) and sharpened its focus on selected projects to bring lasting and effective capital market reforms in the currently 38 economies where EBRD invests.
EBRD’s development related exposure by sector (EoY 2020)
Yearbook 2020
95