Brussels, 05/02/2001 (Agence Europe) - On Monday, the European Commission launched a second round of consultations prior to the renewal of the legislative framework on the capital "adequacy" of credit and investment companies. The aim is to adapt legislation to new types of financial operations, to ensure that European banks and credit companies respond to market changes rapidly and in a flexible manner. This review process is complementary to the one launched on 16 January by the Basle Committee, set up in 1975 by the governors of the central banks of the Group of Ten to ensure banking surveillance (see EUROPE of 20 January, p.13). A consultative document has been sent to interested parties, consumer groups and Member States. It refers to the agenda of the Basle Committee and provides for legislation for 2004, while stipulating that there is no question of a double usage with the Committee, but of "further focusing on problems particular to the Union". Frits Bolkestein, the Commissioner responsible for the internal market, declared that "the highest standards of prudential regulation of capital adequacy are essential for both financial stability and the smooth functioning of the internal market". A Commission press release stipulates that the new rules must reflect the risks taken by banks and credit establishments. The consultative document examines different strategies to ensure that economic risk is taken further into account, and contains a new approach to risk-reduction. Regarding supervision, the aim is to ensure that companies have not only sufficient capital to assure their risks, but also to encourage them to learn to use new risk management techniques. Consultations will close in May, and the Commission will propose amendments to the current framework in the autumn of 2001. The consultative document may be found at:
http: //http://www.europa.eu.int/comm/internal_market/en/finance/capitaladequacy/index.htm