Why Are Long Term Investment Incentive Policies Needed?

The growth potential of Europe lacks long term investment fitted to the transition towards a more sustainable model of development and to an exit to the crisis. In the context of the development of socially responsible behaviours of households, firms and investors, the implementation of economic policies favourable to long term investment could trigger a virtuous circle in terms of mobilization of public and private financing resources.

Nevertheless, filling the financing gap depends not only on the mobilization of savings but also on the efficiency of the financial institutions in terms of intermediation and transformation of savings. For this reason, public authorities have to set a regulatory framework – prudential and accounting – well balanced between, on one hand, the necessary protection against systemic risks and soundness of financial institutions and, on the other hand, the financing needs of the real economy. In this perspective, the preservation of the diversity of the financial ecosystem is a key point in order to ensure its efficiency and its resilience to crises.