The European Bank for Reconstruction and Development (EBRD) has strengthened its partnership with Estonia, Latvia, and Lithuania to support the further development of a unified pan-Baltic capital market. The initiative aims to deepen financial integration across the three countries, remove remaining market barriers, and create a stronger and more attractive investment environment for both domestic and international investors.
As part of this effort, the EBRD and the Baltic states have signed a new Memorandum of Understanding (MoU) that outlines the next phase of their cooperation. The agreement was signed during the EBRD’s 2026 Annual Meeting in Riga by EBRD President Odile Renaud-Basso, together with the finance ministers of Estonia and Latvia and the vice minister of finance of Lithuania.
A key objective of the partnership is to help the pan-Baltic capital market achieve Emerging Market status under the MSCI index classification. Such an upgrade would mark an important milestone for the region, increasing its visibility among global investors and potentially attracting larger volumes of international capital.
It would also strengthen the region’s ability to support business growth, innovation, and long-term economic development. Speaking at the signing ceremony, EBRD President Odile Renaud-Basso highlighted the significant progress already made by the Baltic states in creating a regional capital market through close cooperation and shared ambition.
She noted that the renewed partnership reflects a collective commitment to building a deeper, more liquid, and better-connected market that can provide companies with improved access to financing while expanding investment opportunities for investors.The collaboration between the EBRD and the Baltic states dates back to 2017.
Since then, the partners have worked together through policy reforms, technical assistance programmes, and investment initiatives to create a more integrated regional capital market. These efforts have led to the development of common frameworks for financial instruments such as covered bonds and commercial paper.
In 2023, the region also gained greater international visibility through the introduction of a unified MSCI Frontier Markets classification for the three countries.Under the new agreement, the EBRD and the Baltic governments will focus on several strategic priorities. One of the main goals is to expand and diversify the investor base by encouraging greater participation from both retail and institutional investors, including those from international markets.
Increasing investor participation is expected to improve market liquidity and create a stronger foundation for future growth.Another area of focus will be promoting cross-border financial activity within the region. This includes the development of new financial instruments and investment opportunities that can facilitate greater integration between the three national markets.
The initiative also aims to improve access to finance for businesses of all sizes, from small and medium-sized enterprises (SMEs) to large corporations, while encouraging more companies to access capital markets through public listings and other funding mechanisms.The partnership will also explore innovative cross-border investment solutions, including the creation of thematic investment funds focused on sectors that are considered strategic for the region’s future development.
These sectors include renewable energy, technology, and infrastructure, all of which play an important role in supporting economic competitiveness and sustainability.The development of strong local capital markets remains one of the EBRD’s key priorities in the Baltic region.
By supporting deeper financial integration and helping the pan-Baltic market move towards Emerging Market status, the Bank aims to strengthen access to capital, attract new investment, and support long-term economic resilience and growth across Estonia, Latvia, and Lithuania.
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