Towards a balanced contribution of household credit to the economy

Published in 
Tuesday, 7 April, 2015 - 09:00
CEPS - Centre for European Policy Studies 1 Place du Congrès / Congresplein 1000 Brussels

The ECRI Task Force report on "Towards a balanced contribution of household credit to the economy" is now available. Please click here to have access to it.

This report is based on discussions in the CEPS-ECRI Task Force “Towards a Balanced Contribution of Household Credit to the Economy”, which met several times over a concentrated period from May 2014 to April 2015, under the chairmanship of  Eric Delannoy, former Vice President of Weave. Sylvain Bouyon, CEPS-ECRI Research Fellow, acted as rapporteur.


While policy-makers are creating conditions to strengthen recovery, the debate on the role that retail finance should play in this respect focuses on corporate loans rather than on household credit. The improvement of financing conditions for firms in order to support further investment spending is certainly essential to ensuring sustainable growth. However, a significant part of EU growth will depend on the behaviour of households and on their ability to secure funding for their consumption and investment. It is therefore essential to place further emphasis on the different options available to stimulate household credit, in particular consumer loans. Nevertheless, in order to avoid past mistakes, regulators should continue to develop a framework where consumer loans (and by extension household credit) contributes to the economy in a balanced way. To achieve this, five main issues need to be addressed further. 

  • Greater harmonisation in statistical methodologies to support the policy process.
  • Refinement of macroeconomic models used to boost loans, both in a quantitative way and a qualitative way.
  • Innovative policy tools to deal with persistent and new market dysfunctions for household credit (especially in the areas of information disclosure requirements and responsible lending practices).
  • Better understanding of the integration process of household credit.
  • Accompanying the financial sector throughout its digital transition process.

The Future of Credit and Retail Finance in the European Union

Returning to the agenda for growth in 2014-2019

The ECRI Task Force (TF) aims to help pave the way in setting the 2014-19 European Commission’s agenda for retail financial services, in particular consumer credit. The objective is for TF to represent all stakeholders, including policy-makers, experts, industry and consumer representatives.

Its goal is to identify the most relevant areas and concrete issues and present them in a comprehensible way, including specific recommendations in a Task Force Report (TFR) to be published during the first months of the new European Commission (beginning of 2015).

The aim is to evaluate the possibility of finding an appropriate balance between a revival of consumer credit, which is essential to boost private consumption and therefore to allow the economic recovery to shift up a gear and efficient consumer protection. On one hand, the impact of consumer credit (including revolving credit which represents a very specific case of payment) on GDP growth will be assessed. On the other hand, the key questions of consumer protection will be approached with new ideas. The general idea will be finally to find a method to reconcile the macroeconomic side of regulation (monetary policies, etc) with the microeconomic side.

Further analyses will try to determine what are the best tools to reach the appropriate balance between GDP growth and consumer protection. Firstly, the current degree of consumer credit market integration in the EU will be studied and the aim will be to assess the added value that further integration might (or might not) achieve, against the background of increased wholesale market integration. The TF would also consider whether further attempts to harmonise EU credit law would have positive or counterproductive effects. The ECRI TF Members will have the opportunity to engage in constructive dialogue on the Task Force agenda.

Secondly, the TF will analyse the prospects offered by the digital evolution, which related regulations should be necessary at EU level and how this regulation could help foster the balance between dynamic consumer credit markets and efficient consumer protection.

Finally, the focus will be on the impact of the integration of new technologies (crowd-funding, telecoms, new payments discussion, etc) and new actors into the business plan of consumer credit actors.

Given that consumer credit markets contain very diversified retail products, are relatively flexible and volatile and trigger a significant proportion of the over-indebted households, all the thoughts developed during this TF could provide food for thought for other retail segments.


The ECRI Task Force’s main objective would be to engage the ECRI constituency in the crucial EU policy thinking on retail financial services, especially on consumer credit. The Task Force would seek to identify, comment on and feed in the highest quality data from all relevant sources into the policy processes of the Commission, the Parliament and the regulatory authorities of member states.

In organisational and practical terms, the ECRI Task Force will be based on three or four full ­day multi­stakeholder workshops designed to create an open and informal but structured dialogue on regulatory priorities for the EU retail credit markets to be set by the new Commission.

Task Force Stakeholders

The Task Force will constitute a unique forum of representatives from the European Commission (DGs: Markt, Sanco, Connect), Members and administrators of the European Parliament, officials from member states, representatives of financial services regulators, consumer representatives, business and industry (i.e. banks, consumer credit companies, credit registers and credit management service companies), NGOs and other stakeholders in order to facilitate an in‐depth discussion and provide background research.

At the end of the Task Force, ECRI will publish and circulate among EU and member state policy circles an authoritative analysis including policy recommendations together with an ECRI Task Force Report, which will also be officially published in the CEPS Task Force Report publication series and relevant international publication schemes. This report will be based on discussions in the meetings supplemented by research carried out by the rapporteur.

The ECRI Task Force will meet three or four times between May 2014 and the first quarter of 2015.

12 May 2014: 1st Task Force Meeting

In response to attendees' wishes, the action plan of this Task Force will focus on the consumer credit markets, the economic and institutional factors behind its dynamics, its level of integration and efficiency, the role of EU regulation, the impact of the digital evolution and new technologies and actors, and what could be done.

29 September 2014: 2nd Task Force Meeting

Key messages from the first meeting will be gathered and presented in order to set the workings of the Task Force on more concrete topics. 

The focus will be placed on the following issues:

  • the regulation of revolving credit and potential improvements;
  • the psychology of borrowing and implications in terms of regulations;
  • the type of integration which could enhance growth and further consumer protection;
  • an appropriate consumer protection. 

28 January 2015: 3rd Task Force Meeting

Key messages from the second meeting of the ECRI Task Force will be presented and the main challenges will be discussed and identified.

The focus of the meeting will be placed on:

  • digital banking for the case of household credit (especially for consumer credit)
  • new business models: crowdfunding; peer-to-peer lending

Elaboration of the Task Force Report

In the period between the third and the fourth Task Force meetings, a report of the Task Force will be circulated among the members who will be given ample time to express themselves about the main points so that the larger part of the input is determined before the last meeting.

End of the first quarter 2015: 4th (and final) Task Force Meeting

The ECRI Task Force draft report, which will be finalised after the last meeting followed by adoption through written procedure, will be open for discussion and comments to all participants. ECRI will also table a set of key messages and recommendations, which will be agreed upon by all participants and will then serve as the main tool for communicating the results of the Task Force to policy‐makers.

Additional time will be given to the stakeholders to express their views on the Task Force report, and the report will be published aftwerwards.

First half 2015: TF Report Launch Event

ECRI would organise a prominent event with +100 participants, including non-members of the TF (a larger scope of organisations and of policy-makers as well as journalists) for the launch of the report and high-level participation from European institutions.

This ECRI Task Force is principally designed for ECRI members, but participation will open to non‐members as well, at a fee. The fee covers participation in all workshops, documentation, lunches and three copies of all reports produced. Upon request, CEPS will mail additional copies of the final report to persons identified by participants.