European Economic and Social Committee EUROPEAN INDUSTRY AND MONETARY POLICY The role of the European Investment Bank MAIN PROVISIONAL CONCLUSIONS (To be adapted taking into account the content of the Round Table) Preliminary Draft November 05 2015

1. Monetary policy should be more focused .. Efficiency of Eurozone monetary policy transmission –its link to real economy- should be improved .. Particularly, making sure that resources get to the real economy and do not stay remained in the financial system, out of the Eurozone or in financial speculation .. Without increasing the overall risk of the Eurosystem, the highest proportion of monetary expansion should finance productive activities, related to sustainable growth. 2

2. Involving the EIB, a good solution .. The involvement of the European Investment Bank (EIB) or other public promotional banks or agencies from the EU or the member states seems to be a good way to improve the efficiency of monetary expansion, its relationship with real economy and with productive activities. 3

3. Better results with fewer resources and lower risk (I) .. The collaboration ECB-EIB should increase the efficiency of monetary policy and so, should make possible that better results and impact in real economy are achieved with a lower risk. 4

3. Better results with fewer resources and lower risk (II) For this purpose: ECB and EIB should make an intensive use of the different positions that EIB can take in monetary policy transmission without increasing risks usually taken with banks: Through loans channeled by EIB to banks Providing funds to EIB and national promotional banks or agencies in similar ways as they are provided to commercial banks. Buying EIB and NPBs bonds or accepting them as collateral in similar ways as government bonds are bought or accepted. 5

3. Better results with fewer resources and lower risk (III) B. ECB and EIB could accept operating through EIB even with a higher risk than in other ECB operations. It could be acceptable taking account of the higher efficiency of these funds from the point of view of monetary policy transmission. This higher risk with funds provided to EIB would be compensated with lower risks directly taken with commercial banks. This way, the overall Eurosystem risk would not increase or would decrease. 6

3. Better results with fewer resources and lower risk (IV) C. The ECB-EIB collaboration could go further. Systematic advice from the EIB could be of the greatest importance for a better focusing of the monetary expansion, even in operations directly related to commercial banks. This advice could be mainly related to the conditionalities to be established when banks receive funds generated in monetary expansion, to ensure that these funds are channeled to real and productive economy. 7

3. Legal issues can be solved (I) .. Even with a restrictive interpretation of the independence principle of the Eurosystem, the structural collaboration between the Eurosystem and the EIB can be implemented –by free decision of the ECB- through different ways. .. The ECB-EIB collaboration should be subjected to the monetary policy objectives and, just for this purpose, it should establish a more efficient transmission mechanism between Eurosystem and money supply, stability of prices, real economy and growth. 8

3. Legal issues can be solved (II) ECB and EIB should work together in exploring the specific characteristic of this collaboration. Some options can be envisaged:  .. Transferring resources to the EIB balance: Directly: ECB loans to the EIB Indirectly: Purchase by the ECB of debt issued by the EIB .. Without transferring resources to the EIB balance: - Setting up a Fund managed by the EIB but under the Eurosystem / ECB ownership - Setting up a fund –or an entity- managed and owned by the EIB - Making use of the EIB expertise through advice, formal reports or delegation in allocation of resources. 9

4. Technical issues can be solved (I) .. Risk-sharing: Through the involvement of public promotional banks or agencies in member states .. Interest rates: The differential in rates is more an opportunity than a problem .. Liquidity: Through EIB bonds and/or more liquid investments in the rest of monetary expansion operations. 10

.. An adequate framework for a structural collaboration 5.Why not a Collaboration Agreement between ECB and EIB? .. An adequate framework for a structural collaboration .. It reflects that the collaboration obeys to the free decision of both institutions and so, that their independence is fully respected. .. There are similar Collaboration Agreements between the EIB and other European institutions. .. It may be an adequate framework for sharing views, strategic and operational issues and establishing a climate of mutual collaboration. 11

6. On the role of the European Parliament .. The European Parliament, as representative of the general interest of the European people, and according to its interinstitutional role, should be the adequate body to take the initiative in promoting this kind of mutual collaboration between the ECB and the EIB. .. In this way, the European Parliament should make sure that the EU institutions adequately develope their main functions both in investment policy and in monetary policy. 12

7. On the role of the European Central Bank (ECB) and the European Investment Bank (EIB) .. Of course, as parts of the collaboration we propose, ECB and EIB should play an active role in starting the necessary negotiations to prepare the collaboration agreement. 13

7. On the role of the European Central Bank (ECB) and the European Investment Bank (EIB) .. In particular, the Board of Governors of the ECB and the Board of Governors of the EIB should take a declarative decision in favor of such an approach. For that aim, a common working team should be created between ECB and EIB so as to clarify the interest and the feasibility of the proposed collaboration and, in other case, to propose alternative measures to improve the efficiency of the transmission of Eurozone monetary policy to the real economy. In particular, EU institutions should guarantee that monetary expansion is adequately committed to real economy, development and growth. 14

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