Brussels, 17/02/2010 (Agence Europe) - The fact that Greece was able to hide a number of financial operations behind complex credit default swaps in order to comply with the rules of the Stability and Growth Pact, as the American daily newspaper New York Times revealed this weekend, has reinforced the strong belief of Commissioner for the Internal Market Michel Barnier that greater transparency is needed on these markets which are not regulated at European Union level. "We need to know who is doing what", said the commissioner on Tuesday 16 February after the Ecofin Council (EUROPE 10079). My belief that "the markets for credit default swaps" should be made more transparent has been reinforced, he added. The legislative proposal to be put forward by the European Commission later this year in the field of credit default products is one of the main points of the working programme presented to the ministers by the commissioner. The objective of this proposal, which was announced by the previous Commission last October (EUROPE 10079), will consist of: - introducing European rules governing the central credit swap compensation institutions; - making it obligatory to keep archives of transactions continuing to operate on the "over-the-counter" markets. The Basel II directive will also be amended to increase capital requirements when credit default swaps are made on a bilateral basis rather than on regulated platforms. The Commission, which is in favour of bringing its rules into line with those applicable in the United States, is continuing its reflection as to who should take on the role of supervisor of the central compensation institutions covered by European legislation. Will it be the supervisor of the financial markets or the banking supervisor? "The issue has not been resolved" as to their joint or separate involvement, or on the role to be played by the future European supervisory authorities in the banking and securities sectors, the expert explained.
The other priorities of Commissioner Barnier, which he has already laid out before the European Parliament (EUROPE 10056), include: - political agreement on the financial supervision package on the directive governing hedge funds and capital-investment funds; - the area of financial crisis management via the creation of early intervention tools, restructuring tools in the event of banks going under and a harmonisation of bankruptcy procedures; - the definition of binding rules on pay and bonuses in the financial sector. Although personally in favour, Barnier has not yet spoken officially about the possible creation of a levy requiring banks to cover a proportion of the costs of the financial crisis. (M.B./transl.fl)