The key challenge that European capital markets are facing in the current pandemic environment is how to recast the emergency rescue measures already implemented, in order to support the recapitalisation of small and medium-sized enterprises (SMEs) and ensure their survival and growth in the long term. To achieve that, three questions need to be answered. First, how to turn investment from debt financing into equity or quasi-equity instruments. Second, how to generate a virtuous circle between public and private investments. Third, how interventions at the European and national levels can be balanced and coordinated.