Development of capital and financial markets

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Capital and financial markets play a pivotal role in the sustainable development of market economies, serving as a conduit for the mobilisation of capital and efficient allocation of investment.

Well-functioning markets drive economic growth across all sectors by enabling businesses to innovate, create jobs and manage risks effectively. They also support access to long-term finance, including through expanded use of local currency and domestic resource mobilisation.

The EBRD’s Capital and Financial Markets Development (CFMD) team is committed to fostering robust, resilient and inclusive capital markets across our regions of operations. By developing efficient and transparent financial systems, we help to drive economic growth and stability while facilitating the mobilisation of domestic capital, supporting the green transition and advancing the UN's Sustainable Development Goals. Our efforts are focused on expanding local savings pools, introducing innovative investment products, improving risk management tools and strengthening financial market infrastructure as a whole.   

We take a strategic, data-driven approach to the development of capital markets, addressing transition gaps using comprehensive diagnostics and targeted reforms. Working closely with market stakeholders, the CFMD team offers tailored solutions, including analytical and advisory support, the development of new products, capacity-building initiatives and knowledge-sharing activities. We also offer technical cooperation support for investments and capital market transactions, which serves as a catalyst for broader market development. Where necessary and possible, the EBRD also complements these efforts with direct investments in order to bolster investor confidence and accelerate market growth.

The Bank’s capital and financial market development activities are organised around five priorities: 

Upgrading the capital market policy framework	Projects focused on developing comprehensive capital market development strategies and building institutional capacity
Enhancing the legal and regulatory environment	Projects aimed at drafting new laws and regulations in line with international best practices and supporting the introduction of innovative financial products
Expanding the range of financial products and the investor base	Projects designed to develop a diverse range of financial products for domestic investors, facilitating long-term local currency savings and attracting capital from both local and international institutional investors
Improving capital market infrastructure	Projects focused on enhancing trading and post-trade settlement infrastructure, and fostering regional market integration
Promoting the development of bank and non-bank financial sectors	Projects aimed at strengthening the resilience and sustainability of both banks and non-bank financial institutions

The Capital and Financial Markets Development (CFMD) team was established following the launch of the Local Currency and Capital Markets Development (LC2) initiative in 2010, which sought to strengthen the financial resilience of our investee economies in the aftermath of the global financial crisis.

Guided by the LC2 Strategy 2019-24, the LC2 initiative seeks to expand the use of local currencies and develop deep, efficient and self-sustaining financial markets. The CFMD team works closely with the Treasury team. While Treasury leads the Bank’s efforts in the area of monetary policy and money market developments, CFMD focuses on fostering a supportive environment for investment, strengthening financial infrastructure and mobilising private capital. Our approach combines policy engagement, capacity building and transaction-driven reforms to create vibrant local capital markets that support sustainable economic growth.

A close-up of professionals at a desk with documents, tablets and a laptop

LC2 Strategy 2019-24

The LC2 Strategy 2019-24 is based on (i) lessons learned from the implementation of the previous strategy, (ii) LC2 capital market assessments and (iii) the findings of a study by the EBRD’s Evaluation Department. It explains how the Bank will support local currencies and the development of capital markets in its economies of operations.

Upgrading the capital market policy framework

Examples of projects: Financial models and processes for reserve management, liquidity management and forecasting at central banks; moving from targeting a fixed exchange rate to an inflation target; pricing models for sovereign and corporate bond yield curves; risk management instruments; a comparative study on transaction costs for securities issuance and trading; development of a diagnostic framework for the money market; capital market development strategies; review of supervisory business practices and institutional capacity; strategy and action plan on sustainable/green finance; e-learning programmes for capital markets

Enhancing the legal and regulatory environment

Examples of projects: Developing legal and regulatory frameworks for capital markets (including for covered bonds, securitisation, derivatives and repurchase agreements); improving regulatory frameworks for local currency bonds and introducing rules on protection of bondholders’ rights; providing judicial training on financial instruments and practical training for start-ups; introducing digital solutions for financial reporting and supervision; developing national investment frameworks; helping candidate countries to align their financial market legislation with the EU’s acquis communautaire; assisting with relevant capacity building

Expanding the range of financial products and the investor base

Examples of projects: Covered bonds and asset-backed securities; capacity building and financial support for corporate bond issuance; improvement of the investment environment for institutional investors; pension expert country assessments; a regional MSCI index for the Baltic states; support for SMEs accessing capital market funding (including research coverage and listing support); developing the private equity and venture capital sectors; Funderbeam’s platform for start-up companies; geographical expansion of accelerators and incubators; a research report on the investor base for securities markets in EBRD regions

Improving capital market infrastructure

Examples of projects: Support for regional integration and consolidation of stock exchanges; infrastructure upgrades (IT equipment and systems, delivery versus payment, settlement at T+1/2, and so on); developing business plans for stock markets (including new market segments for SMEs); feasibility studies on establishing CCPs or CSDs; benchmarking stock markets’ trading rules, market segments, IT systems and trading mechanisms against regional peers; capacity building on IPO processes for issuers and advisers

Promoting the development of bank and non-bank financial sectors

Examples of projects: Alignment of banking sector regulatory and supervisory frameworks with EU prudential standards; enhancement of bank recovery and resolution frameworks; deposit insurance; sanctions compliance; open banking; management and resolution of non-performing loans; prudential frameworks for the insurance sector; improving access to finance through pre-rating advice for financial institutions and other companies; facilitating the setting-up of local rating agencies

Case studies

Georgia: Supporting the development of local capital markets

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Supporting the development of covered bond markets

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Egypt and the Baltic states: Supporting the issuance of commercial paper

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Contact Capital and Financial Markets Development team

Alex Pivovarsky, Director

Email:

CFMDEnquiries@ebrd.com

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Development of capital and financial markets

The Bank’s capital and financial market development activities are organised around five priorities:

Upgrading the capital market policy framework

Enhancing the legal and regulatory environment

Expanding the range of financial products and the investor base

Improving capital market infrastructure

Promoting the development of bank and non-bank financial sectors

Case studies

Contact Capital and Financial Markets Development team

Search

Development of capital and financial markets

The Bank’s capital and financial market development activities are organised around five priorities:​

Upgrading the capital market policy framework

Enhancing the legal and regulatory environment

Expanding the range of financial products and the investor base

Improving capital market infrastructure

Promoting the development of bank and non-bank financial sectors

EBRD supports capital market development in Croatia

Pan-Baltic capital market to benefit from single index classification

The Bank’s capital and financial market development activities are organised around five priorities: 