Brussels, 07/07/2010 (Agence Europe) - In Strasbourg on Wednesday 7 July, the European Parliament recommended the creation of measures designed to manage cross-border crises in the banking sector. In its adoption of the report by Elisa Ferreira (S&D, Portugal) on this subject, the EP is calling on the European Commission to submit to it, before 31 December 2011, “one or more draft laws” relating to: a European Union crisis management framework (common legislation on resolution and insolvency, to be applicable to all banking establishments carrying out their activities within the Union); - an EU financial stability fund (under the responsibility of the European Banking Authority to pay for intervention in order to preserve the stability of the system and to stem the contagion of failed banks); - a resolution authority (to orchestrate resolution and insolvency procedures for systemic cross-border banks).
The EP also takes the view that the financial implications of the proposal called for should be covered by appropriate budgetary credit (excluding contributions to the financial stability fund, which would concern only the participating banks).
“Risks cannot and should not be eliminated from the market, but we do require regulation which will make risks more transparent and prevent the emergence of bubbles”, Ferreira told the debate the day before. She added that “it is not our job to prevent banks from going bankrupt but it is our job to ensure that the way in which they are liquidated or reorganised is done in an orderly fashion, and also to limit collateral effects elsewhere in the system to ensure that it is not the taxpayer who picks up the tab”.
Michel Barnier, the European commissioner, promised that he would present, in a communication to be adopted by the Commission in October, a “toolkit” to manage and prevent crises. “You can count on me to present this credible toolkit on the basis of Ms Ferreira's proposal because once again I am convinced, in this field as in others, that prevention is far cheaper than cure”, Barnier said during the debate in the plenary session held the day before. (L.C./transl.fl)