How to unlock the European Investment Bank’s potential: four reforms
This Policy Study was written in the framework of the FEPS YAN (Cycle 7) by the Working Group on the European Investment Bank (members: Christian Koutny, Johannes G.v.Luckner, Neil Warner, Oscar Soons).
The Young Academics Network is a cooperation between the Karl-Renner-Institut and the Foundation for European Progressive Studies. It gathers promising progressive PhD candidates and young PhD researchers ready to use their academic experience in a debate about the Next, Progressive Europe.
Abstract
The European Investment Bank (EIB) is the EU’s multilateral development bank. In this FEPS YAN policy study, the authors suggest four reforms that would help progressive policymakers to unlock the EIB’s potential to play a greater role in the EU economy and its transition to a more resilient, climate-neutral, and progressive economy.
First, the authors suggest the EIB adopts more comprehensive lending targets based on social and environmental criteria. Second, they highlight the need for a stronger focus on equity-like instruments rather than debt instruments, especially in the ongoing response to the Covid-19 crisis. Third, they propose to strengthen the EIB’s accountability towards the European Parliament to ensure a legitimate political direction and democratic control of its activities. Fourth, they propose to convert the EIB’s retained profits into paid-in capital, unlocking up to €110 billion of additional lending capacity. To simultaneously accomplish increased democratic accountability, the authors suggest converting the EIB’s retained profits into EU capital and thus making the EU an EIB shareholder.