The European Commission is launching a new initiative to encourage non-bank lending across Europe in a bid to boost the overall economy, especially the small and medium-sized business sector.
At present, only 30% of lending to businesses in Europe comes from the non-banking sector, such as equity markets, compared to 70% in the United States.
European business are still suffering from the effects of the financial crisis largely due a reluctance by banks to lend.
Banks are still under a state of repair, as they try to meet new capital ratio standards.
Today the Financial Services Commissioner, Britain's Jonathan Hill, will launch what is regarded as a key pillar of Europe's economic recovery, the so called Capital Markets Union.
At present Europe lags well behind the US in sourcing lending from outside the banking sector, and within Europe there are widely differing attitudes.
Under the new initiative, member states would agree a common set of rules on credit rating, solvency and transparency, so that if a small or medium sized business wants to borrow from the equity markets in another country there will be clear rules on how to do so.
Ireland could be well positioned since the financial services centre is host to dozens of equity markets and financial services companies with expertise in the area.
One area of concern, though, is how to avoid another lending bubble such as the one which triggered the sub-prime crisis in the US.
However, Commissioner Hill will argue that a harmonised Capital Markets union will make the financial system more stable by taking the pressure off banks and effectively sharing risk, as well as providing more investment from both inside and outside the EU, for the SME sector and long term infrastructure projects.
