Brussels, 11/02/2011 (Agence Europe) - On Tuesday 15 February, the European Finance Ministers will adopt the position of the EU to be defended by their counterparts from member countries of the G20 at the “Finance” G20 (Paris, 18/19 February). According to a document of which EUROPE has had sight, they support the priorities of the French Presidency of the G20 as regards the fight against macro-economic imbalances, monetary reform, financial regulations and transparency of the raw materials market. Amongst other things, they support the French initiative to ask the participant countries to draft reports outlining the way they implement the commitments taken, with the first version expected for April.
The Europeans staunchly support the “two-stage approach” recommended, initially, to identify macro-economic imbalances, using a finite list of indicators and, secondly, to identify the underlying causes of these imbalances by means of an in-depth analysis. They will plead in favour of a consensus on indicators such as ongoing balance of payments, public deficit, public and private debt, effective exchange rates and net positions of foreign assets.
The ministers agree with the French desire for a “shared diagnostic of the best way to improve the functioning of the international monetary system”. The treatment of flows of capital and the diversification of reserve currencies may correspond to certain “guiding principles”. Notably, the EU considers the measures aiming to restrict the movement of capital as the “second best tool” of monetary policy to deal with the volatility of these loans, after macro-economic and structural measures. The IMF should be given a greater role. Additionally, the EU “may come to an agreement” to look into ways of adding “a small number of currencies from countries of systemic importance” (e.g. the Chinese yuan) to the raft of currencies which make up the DTS, the units of account of the IMF.
Financial regulation. Additionally, they stress the eventual full implementation of the so-called “Bâle II and III” rules on bank capital requirements, with particular attention to be paid to the United States. They plead in favour of an exhaustive approach to the treatment of financial institutions of systemic importance, including a methodology to identify these entities and a list of specific regulatory protection measures. The EU also anticipates “concrete proposals” for a shadow banking system and also to “avoid the accumulation of systemic risks in sectors which are not sufficiently regulated”. In the same way, a monitoring of technological innovation affecting the financial markets, such as “automated trading”, is needed.
Raw materials. Europe is in favour of the French initiative to attack the issue of raw materials focusing on three areas: improving the transparency of the physical markets, improving regulations of financial products derived from raw materials and food security. “The way of giving greater transparency, particularly on the unregulated unofficial markets, without increasing the risk of transactions moving to less regulated systems, is a major factor”, it states.
No reference is made to any possibility of taxing financial transactions as a means of seeking funding to fight climate change in the developing countries. (M.B./transl.fl)