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Economic and monetary challenges - Juncker Plan: first lessons from the past six months?
The Juncker Plan and the role of NPBIs in increasing its leverage effect
By Renaud Basso Odile - Deputy Chief Executive Officer, Caisse des Dépôts Group
Achieving the €315 Bn of total invested expected from the Juncker Plan requires the coordinated actions of the European Commission, the EIB and the National Promotional Banks. The latter have been acknowledged as financial institutions by an EC communication. They are to play a crucial role in addressing the market failures and as anchor investors, attracting investments from sovereign welfare funds and private investors into the real economy. As long term players, they are deeply involved in the projects elected or eligible to the Plan.
It is mostly the case of the older and bigger of them (CDC, KfW, CDP, ICO and BGK), as more recent NPBIs have not yet the resources, skills and experience to complement the interventions of the EIB. These five institutions are notably involved in the development of investment platforms, a new instruments instituted by the Regulation on the European Fund for Strategic Investments. Ranging from funds to co-investment, these new devices offer flexible answers to address the market failures hampering long term investment in Europe. Investment platforms are the best way to reach the leverage effect of the Juncker, expected in the end at 15. As loans and standard interventions from NPBIs and EIB generate low leverage, there is a need to channel private investors at the project and the platform level. This is particularly crucial at a time when most infrastructure projects are small to middle size and fall below the scope of both EIB and private sector.
CDC and its parent institutions are currently working on the follow-up of the Marguerite Fund and are also involved in the design of the broadband fund project, an initiative from the DG Connect and the EIB. As the general framework of rules on investment platforms gets clearer, a significant boost in the process is to be expected during the last mid-term of 2016.