In the context of a severe economic crisis and austerity, new ideas were put forward to reform cohesion policy to enhance its effectiveness and the return on investment. Among them, financial engineering instruments, such as JESSICA, expected to offer a means to 'do more with less' in this difficult budgetary context. In the case of such instruments, EU funds are not offered as grants co-financing investment projects, but rather are used to provide repayable assistance to projects, a form of

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... port. Such revolving funds approach is in stark contrast with the grant-based assistance typically offered as part of EU cohesion policy and was expected to increase the sustainability and effectiveness of interventions. But does it fulfil those expectations? This paper examines JESSICA through the conceptual lens of policy instruments literature. It verifies whether JESSICA is actually fit for its purpose of supporting sustainable urban development. It also gauges the impacts of instrument on the behaviour of the actors involved in its implementation at the sub-national level. The findings indicate that JESSICA is a flawed and overly complex instrument that instead of doing 'more with less' only allows for achieving 'less with less'. However, it still exerts a positive influence on the sub-national authorities involved by promoting cross-sectoral interactions and facilitating learning. It also promotes a change in the approach to EU cohesion policy and public investment more generally, putting more emphasis on economic viability of investment.