The maturity of the ESS loans will depend on the nature of the imbalances and the beneficiary country’s prospects for regaining access to financial markets. The interest rate on the loans, which may be either fixed or variable, will reflect both the funding cost of the ESM and the need to avoid moral hazard behaviour by borrower countries.
Three potential driving forces are crossborder competition, stronger market financing – or non-bank financing – and the appearance of Fintech, typically start-ups, as well as Techfin companies, typically major IT companies broadening their scope of business. Cross-border competition certainly prevails, but many financial activities are still, even within the EU, predominantly national. There are historical and cultural reasons behind.