EU growth seen unlocked with SME funding spurring investment
By Bloomberg
Investment funding for small and medium- sized companies is one of the keys to unlocking economic growth in the European Union, according to policy makers.
The EU initiative to create a capital markets union aims to ease funding for SMEs, reducing reliance on banks.
“That’s one of the hardest tasks,” Anneli Tuominen, director general at the Financial Supervisory Authority, said in an interview in Helsinki. “The companies that are starting up have no cash flow, no collateral -- only an idea -- so how do they get funding? This is one of the questions the CMU should answer.”
The EU is seeking to strengthen sources of funding to the economy that don’t come from banks as part of its response to the financial crisis. By making it easier for citizens to invest in equity and other markets, officials hope to spur more balanced investment across member states.
“The U.S. venture capital market is significantly more developed, about five times the size compared to Europe,” Tuominen said. Even so, “banks will be the main source of SME funding also in the future because banks know these companies best.”
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