Estonia, Latvia and Lithuania have agreed to create a pan-Baltic capital market to strengthen their economies and stimulate investment to create jobs with support of the European Commission (EC) and the EBRD. The Ministers of Finance – Toomas Tõniste for Estonia, Dana Reizniece-Ozola for Latvia and Vilius Šapoka for Lithuania – signed a Memorandum of Understanding (MoU) in Brussels today in which the parties agree to harmonise capital market regulations and dismantle investment barriers.
The goal of the initiative is to attract investment through the creation of a common capital market by combining the strengths of the three Baltic states and overcoming the constraints they often face due to their limited size. The signing took place in the presence of European Commission Vice-President Valdis Dombrovskis and EBRD Vice President, Policy and Partnerships, Pierre Heilbronn. The signatories to the MoU recognize the support provided by the European Commission and the EBRD to the efforts of building a common capital market in the Baltic states.
The agreement sets out the commitment of the three Baltic states to strengthen their cooperation in the development of a common capital market. The three states agree to work together on the design and implementation of the necessary measures, including the establishment and improvement of the underlying legal framework, the introduction of new instruments (for instance, covered bonds and securitisation) and the creation of the necessary market infrastructure.
One of the first projects under the agreement is the creation of a legal framework for a pan-Baltic covered bond. The work on this project is done in cooperation with the EBRD and the European Commission’s Structural Reform Support Service (SRSS).
For further progress the parties will adopt a detailed action plan based on the priorities and possible areas of cooperation as set out in the MoU. They also agree to create a steering committee representing the governments of Estonia, Latvia and Lithuania to oversee progress in the implementation of the measures underpinning the Baltic capital markets.
