The SME sector is a major contributor to growth and employment in the European Union. Banks play a key role in helping businesses to start, trade and grow. Access to finance along with other services and support facilitates the success of enterprises and the creation of jobs. Based on long standing preferences and relationships, European SMEs have chosen bank financing as their main source of external funding. In the wake of the financial crisis, banks have reinforced their strong credit standards amongst others to protect the savings that with which consumers and businesses have entrusted banks with. Banks have also adapted to a very demanding regulatory framework and their business model is evolving. Financial institutions in fact are embracing a digital revolution which can widen the way banks can be accessed.READ MORE
The year 2015 was first marked by efforts to push forward the completion of the Banking Union which includes stronger prudential requirements for banks, improved depositor protection and rules for managing failing banks, and which established a single rulebook for all financial actors in the 28 Member States of the European Union. The EU institutions agreed to establish a Single Supervisory Mechanism and a Single Resolution Mechanism for banks. As third pillar to a fully-fledged Banking Union, in November 2015, the Commission put forward a proposal for a European Deposit Insurance Scheme (EDIS), which is supposed to provide a more uniform degree of insurance cover for all retail depositors in the Banking Union.
Since the start of the financial crisis an old concept is back in the spotlight: development banks. Credited with the ability to increase an economy’s resilience by helping to cushion financing gaps in downturns as well as facilitating access to finance in areas that arguably face shortcomings, development banks are currently seen as part of the economic policy toolkit for overcoming both cyclical and structural difficulties in economies.
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The year 2014 and the first half of 2015 have continued to be marked by sustained regulatory and supervisory activity, mainly aimed at implementing the Banking Union. In order to ensure a higher degree of Banking sector stability, the ECB, now in charge of supervision in the Eurozone, has engaged in an unparalleled exercise of risk mapping in the financial sector, notably by launching an Asset Quality Review and a stress test exercise.Read more
The financial crisis has resulted in a new peak of initiatives to improve the regulatory and supervision framework. Since 2010 the European Commission has proposed nearly 30 sets of rules relating to the parts and activities of the financial sector and the capital markets. New mechanisms have also been put in place in order to have a better governed and deeper economic and monetary union.