Brussels, 11/09/2014 (Agence Europe) - Major European lending institutions will be looking at how to stimulate finance and investments at a European level, during their informal meeting on Friday 12 and Saturday 13 September in Milan.
Continuing on the lines previously set out by Eurogroup (see EUROPE 11150), ministers and central bankers will examine the economic situation on Saturday. The situation is characterised by sluggish growth and deflationary pressures. They have already been informed by France that the country is unable to bring its deficit to below the 3% of GDP ceiling before 2017, but in the meantime will maintain structural budgetary efforts (see EUROPE 11152).
EUROPE obtained a copy of the Italian presidency's document, which will provide the basis for the discussions. This document outlines the initiatives to be carried out at European level for relaunching investment. The number one priority is structural reforms to create an investment friendly environment: - reform of the labour market; - transfer of income tax to consumption; - reducing companies' job creation costs. Other initiatives involve attempting to locate new sources of finance, through the regeneration of the structured products markets (see EUROPE 11140) and better access for SMEs to the capital markets and nonbanking financial intermediaries. The Italian presidency highlighted the efforts taken to align the Community budget (the cohesion policy, Horizon 2020 and the Competitiveness of Enterprises and Small and Medium-sized Enterprises (COSME), etc.) on the economic priorities. The presidency believes that it is possible to still focus the EU budget on relaunching investment. In the three months following its inauguration, the “Junker” Commission will present an investment plan in the transport, energy and new technologies sectors, which could reach a figure of around €300 billion over the three-year period. Poland is even proposing to set up a European fund that to leverage €700 billion over five years (see EUROPE 11151). Increased cooperation could also be introduced between the public and national investment banks and the European Investment Bank (EIB), based on the experience of the “Marguerite” Fund for energy and climate change.
Banking union. Ministers will look at progress in the implementation of the banking union supervisory chapter, through which the European Central Bank (ECB) will directly supervise 119 systemic banks in the eurozone as from next November. They will also be informed about the ongoing analysis into the solidity of the banking sector, carried out by the ECB and the European Banking Authority (EBA), whose results are expected out in the second fortnight of October. They will underline the importance for member states to provide safety nets in view of tackling potential bank failures in their respective territories.
The question of bank contributions to resolution funds as from 2015 will also be tackled. At the beginning of October, the Commission will put forward two authorising measures that are the subject of heated discussions between the Council and the European Parliament, which were called on to approve or reject these texts as a block (see EUROPE 11151).
Ministers will discuss international regulatory cooperation in the financial domain, particularly with the United States. A Commission note underlines the importance of making “additional efforts” to reduce regulatory differences. It lists the areas where divergences are still significant: the derivatives markets, bank resolution tools, structured product markets, pay policies, accounting standards and prudential rules. According to the Commission, an approach based on the recognition of equivalence in rules is the best way to promote regulatory convergence.
In this perspective, ministers will draw up a common European position in view of the G20 Finance Meeting during the IMF and World Bank autumn meetings programme.
At the working dinner on Saturday, ministers will discuss opportunities for introducing a European wide unemployment insurance mechanism, to help member states tackle the costs of certain structural reforms and/or macro-economic fluctuations.
It should be noted that Friday afternoon will exclusively focus on the ministerial meeting with ASEM countries. A four hour meeting focusing on employment and growth in view of the October summit between leaders of these two regions will be followed by a gala dinner at the Galleria d'Italia. (MB)