The European Commission published a public consultation under a Green Paper with the aim at gathering views on how to foster the supply of long-term financing and how to improve and diversify the system of financial intermediation for long-term investment in Europe.

According to the European Commission, the financial crisis has affected the ability of the financial sector in Europe to channel savings to long-term investment. In February 2012, EU Ministers committed to work on potential pathways for long term finance to fight climate change. With the aim at assessing what can be done to improve the availability of long-term financing, the European Commission has published a Green Paper that focuses on how that process operates. The publication includes a public consultation on this topic that will be open until 26 June 2013.

Among the questions to answer within the consultation, it is whether Europe's historically heavy dependence on banks to finance long-term investment will and should give way to a more diversified system with significantly higher shares of direct capital market financing (i.e. bond finance) and greater involvement of institutional investors (e.g. pension funds) or to other alternatives. Moreover, the Commission highlights that the financing needs of SMEs deserve particular attention as they have the potential to underpin long-term growth. They need access to bank as well as non-bank financing.

The importance of long-term financing for growth and job creation has been recognised at international level by the G20. The Commission stressed that the capacity of the economy to finance long-term investment depends on the ability of the financial system to effectively and efficiently channel these funds to the right users and investments through open and competitive markets. This process can be carried out by various intermediaries – including banks, insurers and pension funds – and by direct access to financial markets.