Regulation 2022/2434 - Amendment of Regulation (EU, Euratom) 2018/1046 as regards the establishment of a diversified funding strategy as a general borrowing method - Main contents

EN

Official Journal of the European Union

L 319/1

Article 220 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (3) (the ‘Financial Regulation’) provides that the Commission is empowered, in the relevant basic act, to borrow on behalf of the Union or Euratom for the purpose of on-lending the corresponding amounts to beneficiary Member States or third countries under the conditions applicable to the borrowings. In that regard, the cash flows between the borrowed funds and the loans are matched one-to-one. This means that the Union must carry out market operations based on disbursement needs for each specific case of lending, which limits the possibility to coherently plan various borrowing operations and to structure maturities to achieve the best costs.

Financing individual programmes of financial assistance through separate funding methods creates cost and complexity as different programmes of financial assistance compete for a limited number of funding opportunities. It fragments the supply of Union debt securities and reduces liquidity and investor interest in the separate programmes, even though all Union debt securities have the same high credit quality. Financial assistance should thus be organised under a single funding method that enhances the liquidity of Union bonds and the attractiveness and cost-effectiveness of Union issuance.

The need for a single funding method is emphasised in particular in the context of financial support to Ukraine given its urgent financing needs. Recent experience with the funding needs for Ukraine has highlighted the disadvantages of a fragmented approach to the organisation of the Union’s debt. In order to strengthen the Union’s position as an issuer of euro-denominated debt, it is of paramount importance that all new issuance be organised through a single funding method.

The model for a single funding method, and most elements of the infrastructure needed for its implementation, have already been established in the form of a diversified funding strategy under Council Decision (EU, Euratom) 2020/2053 (4). That strategy has allowed the successful mobilisation of funds for grants and loans under Regulation (EU) 2021/241 of the European Parliament and of the Council (5) and for a range of other Union programmes referred to in Council Regulation (EU) 2020/2094 (6). In view of the expected complexity of operations needed to satisfy the urgent financing needs of Ukraine, and to anticipate possible future borrowing and lending operations, it is appropriate to establish a diversified funding strategy as the single funding method for implementation of borrowing operations.

The use of a diversified funding strategy should allow the flexible implementation of the funding programme, while fully respecting the principles of budgetary neutrality and budgetary balance as set out in Article 310(1) of the Treaty on the Functioning of the European Union (TFEU). The costs of the funding...