Commission plans to tap pension funds to kickstart business

"Our financial system must regain and increase its ability to finance the real economy," he said, adding that "we need to diversify financing sources in Europe and improve access to finance for small and medium sized enterprises."

The bloc also needs to kick-start investment in research, new technologies and energy if it is to reach ambitious targets in its Europe 2020 and 2030 climate and energy package. It is also seeking funds worth around €1 trillion for its flag-ship infrastructure project Connecting Europe.

As part of changes to the rules governing work-related pensions, the Commission wants to ease the restrictions on what these funds can invest in. It also wants to reduce the capital requirements for banks and insurance firms looking to invest in asset-backed securities.

Although such securities products triggered the sub-prime debt crisis in the United States which, in turn, was at the heart of the 2008-9 financial crisis, Barnier insisted that easing the rules would not risk a repeat of the crisis.

European pension funds have assets worth more than €2.5 trillion on their books on behalf of over 75 million people. The EU executive believes these could be invested in businesses.

Europe needs alternative sources of investment as its banks continue to recover slowly from the financial crisis in 2008-9, while the countries hit hardest by the eurozone's debt crisis have seen businesses starved of cash.

The EU executive estimates that only one in three Greek and Dutch businesses and one in two Spanish and Italians got the full amount of credit they applied for in 2013.

Lending to small businesses in across the bloc's periphery has fallen by over 50 percent over the past five years, according to research by the Institute of International Finance.