France and Germany call for change of EU funding for economic development projects

France and Germany are calling for a shake-up of EU funding for economic development projects, warning that Europe’s largest multilateral lenders are poorly coordinated and could be merged. In a paper seen by the Financial Times, Berlin and Paris call for an expert group to explore options for a “clearer delineation of mandates” between the Luxembourg-based European Investment Bank and the London-based European Bank for Reconstruction and Development.

The group should also look at the possibility of a “full integration” of the two institutions, the document says. Diplomats said the paper reflected frustrations that the two banks, which are both publicly owned, are overlapping.

The EBRD, whose shareholders include 67 countries as well as international institutions, was created at the end of the cold war to support communist countries’ transition to having market economies, while the EIB is wholly owned by EU governments and finances economic development projects inside and outside the bloc.

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