EBRD sets out new Approach to Financial Market Development

• EBRD unveils its new Approach to Financial Market Development
• The paper highlights financial markets as a critical component of well-functioning market economies
• It also sets out the Bank’s high-level objectives and explains how it helps build local financial markets

The European Bank for Reconstruction and Development (EBRD) has published its new Approach to Financial Market Development, underlining the central role of deep and resilient domestic financial markets in delivering the Bank’s transition objectives under its Strategic and Capital Framework (SCF) 2026-30.

The paper sets out how the Bank supports financial market development across its countries of operation, drawing on more than three decades of experience as well as lessons learned through crises and policy responses.
It emphasises how financial markets are an essential pillar of private-sector-oriented economies, and how they help to drive economic growth by efficiently pricing and allocating capital, enabling savings to be channelled into investments in productive businesses.

The Approach aligns with the Bank’s 2026-30 SCF and highlights the importance of domestic markets in strengthening economic governance. It explains that these markets have a wide-ranging impact, from improving monetary policy transmission and financial risk management to increasing transparency and corporate governance through the discipline imposed by public markets.

Deeper local financial markets also strengthen economic resilience by increasing the use of local currencies and reducing reliance on foreign exchange inflows. This in turn supports the EBRD’s ability to expand local currency financing through active participation in local markets for funding, risk and liquidity management purposes.

Developing local markets is equally crucial for mobilising long-term private capital and diversifying funding sources. As well as providing instruments for private investors to invest alongside the EBRD, they help market participants to manage financial risks, supporting the wider multilateral development bank mobilisation agenda.

Alex Pivovarsky, the EBRD’s Head of Capital and Financial Markets Development, said: “Deepening financial markets is a system level priority for the EBRD. Our new Approach to Financial Market Development builds on our decades of experience across our countries of operation, and we look forward to engaging with all our partners to help implement it.”

Aude Pacatte, the EBRD’s Head of Portfolio Management for Europe, the Middle East and Africa at the EBRD Treasury, added: “By combining policy work with investments and active participation in local currency markets, we are uniquely positioned to support our countries in addressing barriers that constrain market development and to contribute to policy effectiveness, economic resilience and private capital mobilisation at scale.”

Founded in 1991, the EBRD plays a significant role in local financial market development across its regions through a combination of investment, technical assistance and policy dialogue.