Banks have a pivotal role in providing financing to households and firms. It is particularly so in Europe where the banks’ role in corporate finance has traditionally been large. The banks’ role in corporate finance is central especially for small and medium sized enterprises (SMEs).
The continuous and smooth supply of banking services to SMEs is also essential to large corporations because SMEs are often subcontractors to them. It is of utmost importance that regulatory reforms as a whole support and strengthen the banking sector’s ability to continue to provide these socially vital financial services efficiently and in a stable manner.