What are financial instruments?
Financial instruments represent a potentially resource-efficient way of deploying public resources to target projects with expected economic viability (investment returns) in pursuit of the Europe's development and investment objectives. Financial instruments (FIs) provide support for investments by way of loans, guarantees, equity and other risk-bearing mechanisms, possibly combined in the same operation with technical support, interest rate subsidies or guarantee fee subsidies.
The rationale for FIs
Besides the obvious advantages of recycling funds over the long term, financial instruments help to mobilise additional public or private co-investments in order to address market failures in line with European cohesion policy priorities. Their delivery structures entail developing additional expertise and know-how, which helps to increase the efficiency and effectiveness of public resource allocation. Moreover, these instruments may provide a variety of incentives for better performance, including greater financial discipline at the level of supported projects.
Financial instruments have been used to deliver investments under the cohesion policy funds since the 1994-1999 programming period. Their relative importance increased during the programming period 2007-2013. In the period 2014-2020 they now represent more than 10% of total European Regional Development Fund (ERDF) resources. In the light of the context of scarcity of public resources, financial instruments are expected to play a increasing role in cohesion policy in the future.
A total EU allocation of EUR 14 billion
In this chart you can see the total EU amount allocated to FIs from each of the different ESI Funds to approved FI funds. Overall more than EUR 14 billion was allocated by end-2017, with around 94-95% of that funding under the ERDF. (The chart can be filtered to see earlier or more recent years). The dataset also includes information on the total committed amount including national funding.
What are the big investment themes?
The largest share of EU funding has been assigned to support small and medium-sized enterprises (around 50%), followed by investments in the low-carbon economy (around 10 % – mainly in energy efficiency), research, development and innovation (around 10 %), and employment, labour mobility and social inclusion (around 5%).
How are the different EU Member States using FIs?
This chart shows you the financial volumes approved in each Member State with the total and EU approved amounts. (Again, the filters can be used to see progress over time and by fund.)
Who will be interested in FI data?
The dataset on FI financial progress will be of interest to a range of Cohesion Policy stakeholders and researchers. This data facilitates monitoring the use of EU and national financial resources allocated to FIs fund by fund. It provides an overview and information on average rates of financial progress. Over time there are significant differences across Member States in the rate of progress delivering these instruments. Some EU countries were slow to select financial intermediaries, while some FIs are demonstrating early concrete results in terms of leveraging resources returned for further investments.
By the end November 2018, nearly 900 users had viewed the dataset and 150 researchers and students had downloaded it.
Need to know more?
- Investigate the dataset used to generate the graphs presented above, which has more details on financial implementation by programme, also down to the level of commitments and payments made to the final recipients (i.e. SMEs).
- The Commission provides more information and maintains a list of annual data summaries and resources on this webpage.
- The fi-compass platform maintains a library of documents, country pages, examples and events here.
- The 2007-2013 ex-post evaluation (work package) on support to FIs is available here.
- Contact our colleagues: REGIO-B3-FINANCIAL-INSTRUMENTS@ec.europa.eu