Financial sector and access to finance

Banks

Maintaining an efficient and reliable banking system is important for achieving sustainable economic growth. The market environment is shaped by new digital technologies, dynamic consumer preferences, increasing competition and changing regulations. Supervisors therefore regularly assess and adjust supervisory practices to ensure effective stimulus and monitoring of the banking sector. In doing so, they have to strike the difficult balance of strengthening the institutions’ resilience without undermining their business sustainability.

EXAMPLES OF SUPPORT

• Prudential supervision Implementation of the European Banking Authority’s guidelines, supervisory manuals and training; development of models supporting supervisory assessment.
• National Development Banks (NDBs) Developing internal assessment tools, improving organisational structures, capacity building.
• Data management and software infrastructures Improving software infrastructure and analysis and enhancing prudential reporting set-ups.
• Payment systems Assessing payment infrastructures, developing e-payment strategies.
• Non-performing loans Developing supervisory tools to reduce the level of non-performing loans and assisting in the establishment of asset management companies.

Insurance undertakings and pensions

The European Commission supports insurance supervisors and pension administrations across the EU to strengthen prudential and conduct supervision of insurances as well as to build solid funded pension pillars. In doing so, it takes into account the needs and specificities of the local insurance markets and pension eco-systems.

The Commission aims to contribute to best-in-class insurance supervision while ensuring convergent application across the EU. Furthermore, it strives for solid multi-pillar pension systems in Europe that are reinforced by strong funded pension pillars. These efforts improve financial stability and enhance the role of the insurance and pension funds industry in funding our economy in a sustainable way.

EXAMPLES OF SUPPORT

• Improving prudential supervision in core areas such as solvency, stress testing and risk management.
• Capacity building in the area of conduct supervision.
• Addressing emerging risks, such as digitalisation or sustainable investments.
• Strengthening pillar II pension schemes.

Capital markets

The Capital Markets Union is an economic policy initiative that aims to further develop and integrate EU capital markets. The goal of the Capital Markets Union is to promote cross-country risk sharing and to enable companies and projects to obtain diverse funding, regardless of their location in the EU. The Commission helps EU Member States remove barriers at national level that stand between investors’ capital and investment opportunities. It provides technical support in collaboration with the Directorate-General for Financial Stability, Financial Services and Capital Markets Union.

EXAMPLES OF SUPPORT

• Providing domestic capital market diagnostics with in-depth analysis of impediments to capital market development.
• Designing multi-year capital market growth strategies.
• Developing appropriate market infrastructures and market-friendly public policies.
• Designing and implementing a capital market development accelerator fund or a small and medium-sized enterprise (SME) equity support instrument.
• Developing supervisory manuals for capital market supervision.

National Promotional Banks and Institutions

The European Commission supports National Promotional Banks and Institutions (NPBIs) to enhance the impact of their role to boost investments in the Union, and to promote national strategic policy objectives, contributing to an increase in the competitiveness of the European economy. 

NPBIs play a pivotal role in the economic policy mix of almost all EU Member States. They finance governmental priorities such as public infrastructure, research and innovation, sustainable and social projects, and they enable access to finance for SMEs and projects related to intangible assets. NPBIs aim to address and overcome market failures and sub-optimal investment situations as well as to stimulating the economy case of crisis or recession. In many cases, NPBIs co-finance alongside private sector investors with the objective of crowding-in private investment and thereby leverage public funding. 

Considering the function and impact of the NPBIs’ activity, the European Commission support allows them to better accomplish their promotional missions and, therefore, to indirectly support EU policy priorities as well as to contribute to the economic growth.

EXAMPLES OF SUPPORT

• Preparing institutional creation
• Improving institutional capacity and development of financial instruments
• Preparing for the EU Pillar Assessment
• Supporting NPBIs to engage in sustainable finance

Sustainable Finance

The European Green Deal and the EU’s sustainable finance strategy define the operational strategies for achieving a climate-neutral EU economy by 2050.

The Commission plays a key role in supporting EU Member States throughout the whole spectrum of reform actions that are needed to implement these strategies. The ultimate objectives are to reorient capital flows towards sustainable activities and to address climate-related risks faced by the financial sector.

EXAMPLES OF SUPPORT

• Helping to prepare sustainable finance action plans to identify barriers to sustainable finance and build the right capacity.
• Enhancing sustainability proofing for national promotional institutions.
• Implementing sovereign green bond frameworks.
• Supporting national authorities in the coherent implementation of reporting and disclosure obligations.
• Integrating climate risks into supervision.
• Providing capacity building, including training programmes.

Digital Finance

Digital finance refers to the use of digital technologies to deliver, regulate and supervise financial services. The rapid evolution of digital tools and business models is reshaping how financial services are provided, creating new opportunities for innovation while introducing complex regulatory and supervisory challenges. To help Member States adapt to this transformation, the European Commission provides technical support to strengthen national frameworks for digital-finance regulation, supervision, and operational resilience. This assistance has been including diagnostic assessments, capacity-building, and support for data-driven supervisory practices, enabling authorities to address risks related to cybersecurity, data governance and market integrity. By fostering the exchange of good practices and supporting coherent implementation of EU digital-finance rules, the Commission contributes to building a secure, competitive, and inclusive digital-finance ecosystem across the Union.

EXAMPLES OF SUPPORT:

• Holistic capacity-building, enabling the acquisition of new expertise and skills, knowledge sharing and peer-to-peer exchanges.
• Design of SupTech solutions supporting more effective financial market oversight.
• Development of an institutional SupTech strategic plan.
• Strengthening the understanding of AI developments in the financial sector.
• Development of regulatory sandboxes.

Insolvency and debt restructuring

Enhancing the robustness of insolvency frameworks is one of the EU’s main objectives to continue the integration of capital markets in the EU. Well-functioning insolvency frameworks are essential for the efficient allocation of capital in an economy. A solid insolvency framework is crucial for a good business environment. It supports trade and investment and helps economies to effectively manage non-performing loans. The Commission supports EU Member States in their efforts to design and implement reforms to ensure the effectiveness and efficiency of their insolvency legal frameworks.

EXAMPLES OF SUPPORT

• Modernising insolvency legislation and benchmarking national systems with other jurisdictions and international best practice.
• Introducing early warning tools, designing preventive restructuring frameworks and strengthening the framework for out-of-court settlements.
• Improving the institutional framework so that court systems can handle insolvency and restructuring procedures more quickly.
• Reviewing national frameworks for insolvency practitioners, enhancing enforcement, data collection and cross-border insolvency.

Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT)

Risks of money laundering and the financing of terrorism remain major concerns for the integrity of the EU’s financial system and the security of EU citizens. The Commission supports EU Member States in their efforts to transpose and implement the EU’s legal anti-money laundering framework in line with their national needs and institutional set-up, to address Financial Action Task Force (FATF)/Moneyval evaluation findings and to react efficiently to new challenges coming for example from the virtual assets and decentralised finance. 

EXAMPLES OF SUPPORT

• Preparing risk-based approaches for monitoring anti-money laundering and/or combating the risks of financing terrorism.
• Preparing national or sectoral risk assessments and mitigation action plans.
• Organising capacity building workshops for supervisory and/or FIU staff.
• Strengthening strategic and operational analysis of Suspicious Transaction Reports.
• Organising exchange of information and practices between competent authorities/Financial Intelligence Units.

EU restrictive measures (“sanctions”)

The EU sanctions regimes providing for targeted restrictions on financial assets, economic resources, goods and technologies towards designated third countries, entities and individuals are key tools of the EU common foreign and security policy. EU sanctions can only have a full impact when they are properly implemented and enforced. National competent authorities (NCAs) in EU Member States are responsible for ensuring that sanctions are fully implemented. NCAs in EU Member States are also responsible for sanctions enforcement, ensuring that sanctions violations are punishable by effective, proportionate and dissuasive criminal or non-criminal penalties.

To ensure effective implementation and enforcement of sanctions, the European Commission supports the sharing of good practices and capacity-building. This support is essential to help EU Member States for consistent and effective sanctions implementation and enforcement, in a context of evolving sanctions requirements and sanctions circumvention risks. 

EXAMPLES OF SUPPORT

• Review of practices and methodologies for the identification of persons in effective control of a company.
• Identification of risks of sanctions circumvention.
• Good practices and powers of sanctions NCAs for cross-border and national sharing and access to information.
• Good practices in examination of queries posed by EU business operators regarding designated individuals and entities.
• Training sessions and awareness-raising workshops for effective and consistent implementation of EU restrictive measures.

Financial literacy

Financial literacy empowers individuals to engage in healthy financial practices and secure their financial independence and well-being. By fostering sound financial habits, individuals and households can improve their financial resilience, leading to greater economic stability and reduced risk of over-indebtedness. By promoting financial inclusion and civic engagement, financial literacy helps build a more resilient society. Moreover, Financial literacy contributes to the Savings and Investments Union.

The Commission supports national administrations to diagnose the levels of financial literacy and digital financial literacy amongst population target groups and to identify and address the needs demonstrated by these diagnostics. The Commission also supports EU Member States in creating dedicated programmes and targeted designed tools for improving financial literacy and education.

EXAMPLES OF SUPPORT

• Developing national strategies aiming at strengthening financial literacy and digital financial literacy, fostering responsible financial behaviour and increasing financial resilience.
• Implementing financial literacy strategies through the development of specific educational and/or communication tools.
• Evaluate financial literacy strategies and tools to improve their effectiveness over time.

Crisis management

The financial crisis showed that some areas of the financial sector were not sufficiently regulated and that supervisors did not have adequate
tools to deal with failing institutions. To improve cross-border coordination and reduce future dependence on public money, the Bank Recovery and Resolution Directive (BRRD) fully reformed the EU framework for managing the failure of financial institutions. The Commission supports EU Member States in the design and implementation of reforms to ensure the effectiveness and efficiency of national recovery and resolution frameworks for financial institutions.

EXAMPLES OF SUPPORT

• Developing crisis management manuals to provide resolution authorities with step-by-step guidance on the use of resolution tools at national level and/or in a cross-border context.
• Carrying out crisis simulation exercises to test the operational preparedness of the national authorities for resolution.
• Helping to prepare adequate bank insolvency legal frameworks to ensure appropriate tools for swift and efficient procedures.
• Design of policy and legal measures for addressing legal and operational weaknesses and challenges, in the functioning of its deposit guarantee schemes.