Brussels, 12/05/2010 (Agence Europe) - On Tuesday 18 May, European finance ministers are to meet to discuss the possibilities of enhancing economic policy coordination in the European Union and especially in the eurozone, hardly 10 days after having adopted an unprecedented plan aimed at safeguarding financial stability (EUROPE 10137). They will seek to confirm the existence of qualified majority on the proposal for a directive on the management of alternative investment funds.
Economic governance of the eurozone. Commissioner for Economic and Monetary Affairs Olli Rehn will present to ministers the communication adopted by the Commission on Wednesday on strengthening economic governance (see related article). This document is based on three things: - a strengthened Stability and Growth Pact; - greater surveillance of economic policies; - and the establishment of a permanent crisis resolution mechanism. Also on the table is the establishment of a “European semester”, which, at European level, would allow prior peer examination of national reform programmes and draft budgets.
Ministers may hold an exchange of views on this issue. They will also take stock of and contemplate follow-up action for measures adopted during their extraordinary meeting on Sunday 9 May. Spanish and Portuguese ministers will present to their colleagues additional measures for budgetary consolidation to be implemented in 2010 and 2011. The Ecofin Council will also adopt conclusions analysing progress made on the excessive deficit exit strategy. In March this year, ministers had agreed to the following sequence of withdrawing extraordinary aid granted in response to the economic and financial crisis - first of all, sectoral measures, and then measures aimed at the labour market once recovery is well under way, and finally measures promoting access to credit (EUROPE 10099). Other conclusions will be adopted on the role of the budgetary frameworks in strengthening consolidation of national public finance.
Hedge funds. The Ecofin Council will be called upon to confirm the political agreement on the proposal for a directive on hedge funds and private equity noted on Wednesday 12 May during the meeting of national ambassadors with the EU. The agreement is based on the latest compromise proposal from the Spanish Presidency at the March ECOFIN Council which rules out the concept of a European passport for managers and funds established outside the EU (see EUROPE 10099). On Wednesday, the UK and the Czech Republic put down reservations on this, however. At this stage, it is difficult to know what the reaction of the new UK coalition government will be next week to this highly sensitive legislative proposal. With 80% of hedge fund management on its soil, in March, the UK managed to prevent a political agreement from being voted through by qualified majority and, thus, without its agreement. In Strasbourg on Monday 17 May, the European Parliament economic and financial affairs committee is due to vote on the draft report by Jean-Paul Gauzès (EPP, France). Among the rapporteur's compromise amendments are those on how to deal with managers and third country funds which provide for the granting of a passport, subject to conditions (see EUROPE 10132).
Management of the financial crisis. Following their debate at the informal meeting in Madrid (see EUROPE 10121), ministers will adopt conclusions on the management of the financial crisis which resulted from the failure of a cross-border financial institution. According to a draft text, ministers feel that the financial sector should bear the cost of rescue measures in a way that reflects its responsibility in the crisis and takes account of the risks which financial institutions cause to financial stability. They state that several member states have introduced or intend to introduce levies or taxes which will be paid into their national coffers or a national stability fund, and that third countries and international organisations (IMF, FSB, Basel Committee) have made specific proposals. They say that further work is needed at European and international levels in this area and also on strengthening own funds requirements in the banking sector, with all these efforts containing an assessment of the cumulative effect of the various planned regulatory measures. Ministers will also note the Commission's intention to present: - a communication on a European network of financial stability funds in May; - a legislative review of European rules on national deposit guarantee and investor compensation schemes (directives 1994/19/EC and 1997/9/EC) and similar measures for the insurance sector in July. It will be for Council experts to deliver their report on the work relating to management of the financial crisis.
Other business. The ECOFIN Council will hold a policy debate on the preparation of integrated guidelines on growth and employment policies. It will adopt, without debate, conclusions taking stock of immediate measures, aimed at developing countries, on tackling climate change. (M.B./transl.tfl)