The possibility of local government bodies obtaining loans is legally guaranteed in all Western European countries. However, besides the European Charter of Local Government, which guarantees local governments access to capital markets, even the EU has not devised any universal principles regarding the means of local-government public borrowing and its limits. Local governments obtain loans mainly in order to carry out investment projects. This purpose is often specified as the only justification for taking short and long-term loans. Such limitation is stipulated in the laws of France, Belgium, Germany, and Luxembourg. Not all Western countries have special provisions in this respect, but there is a widely-accepted practice of long-term loans being provided mainly for investment purposes.

The financing of local government investment projects in some Western European countries is carried out through loans given by banks or government agencies which have access to "cheap" funds, for instance in the UK there is a Public Works Loan Board; the Landesbank in Germany and the French have their Credit Local de France.

Big cities and wealthy regions are the main issuers of municipal bonds. Contrary to the views and assumptions cherished in Poland, the role of the capital markets in financing local government bodies in Western Europe is insignificant. In spite of an obvious increase in the number of municipal bonds issued on the Euro-market, their share in the overall issue rate is quite minor. The main Euro-market players are French, German, Spanish and Italian regions and communes. In the US the municipal bonds are issued by the local administrative bodies at all levels. In the last twenty years their popularity has grown very significantly.