Can national development banks translate the EU´s new goals? Lessons from the Spanish case Clara García a , Rafael Fernández a and Daniel Díaz-Fuentes b a Complutense Institute for International Studies, Universidad Complutense de Madrid, Madrid, Spain; b Department of Economics, University of Cantabria, Santander, Spain ABSTRACT The EU has committed itself to ambitious environmental, social, and techno-productive goals, and national development banks (NDBs) in the European financial architecture can be key actors in invest- ment to finance them. However, not all EU member states have large and mature NDBs. In this light, this article examines the role of Spain´s mid-sized Instituto de Crédito Oficial and concludes that its dual nature, between the investment state and the private sector, provides it with levers to pursue EU goals effectively. Certain ele- ments of this case could be used as lessons for other EU countries with smaller or underdeveloped NDBs. ARTICLE HISTORY Received 4 November 2023 Accepted 30 July 2024 KEYWORDS ICO; national development bank; european financial architecture; sustainable finance; European economic policies; investment state JEL CLASSIFICATION G21; G28; H44; 052 1. Introduction Since at least 2015, following the launch of the United Nations Sustainable Development Goals and the Paris Agreement – and even more so since the COVID-19 pandemic and the invasion of Ukraine by Russia – the European Union (EU) has committed itself to ambitious environmental, social, and techno-productive goals (Jones 2021). Targets of net zero emissions, social inclusion, digitalization, and strategic autonomy will all require vast financial resources. To make this happen, the EU proposes to use Europe’s financial architecture in support of its ambitious policies. However, criticisms have been made regarding some of the institutional weaknesses of this financial architecture, both as a system itself, as well as the functioning of some of its parts, including the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD) and the Council of Europe Development Bank (CEB) (see Wise Persons Group 2010; Wieser et al. 2019; Clifton et al. 2024a, 2024b). Despite these challenges, it is expected that National Development Banks (NDBs) in the EU will play a key role in facilitating the financing of public goals, not only as direct investors but, also, as “blenders and dynamic mobilisers” and “policy influencers and investment innovators” (Griffith-Jones, Attridge, and Gouett 2020, 28 and 34; Mazzucato 2023; Zhang 2022). NDBs, operating within the European financial architecture, could help act as key players in resolving what some experts have identified as an apparent “paradox” in the EU: the desire, on the one hand, for greater industrial policy and, on the other hand, strong CONTACT Clara García clgarcia@ucm.es JOURNAL OF ECONOMIC POLICY REFORM https://doi.org/10.1080/17487870.2024.2387567 © 2024 Informa UK Limited, trading as Taylor & Francis Group