Brussels, 01/04/2008 (Agence Europe) - Given current upheavals, discussions on financial stability will dominate the informal meeting of EU finance ministers on 4 and 5 April in Brdo, Slovenia. The president of the European Central Bank (ECB), Jean-Claude Trichet, and the governors of national central banks are to attend this meeting chaired by Slovenian Finance Minister Andrej Bajuk. During the morning, it will be preceded by an informal meeting of the 15 eurozone ministers, chaired by the Luxembourg prime minister and finance minister, Jean-Claude Juncker.
With an inflation rate at its peak (3.5% in March), the Eurogroup will have its work cut out for examining the eurozone's economic situation. This new historic rise in the general level of prices further fuels the already considerable fears expressed by the ECB, which above all dreads an inflationary spiral (when the rise in consumer prices spreads to salaries and to the economy as a whole). While President Trichet does not miss an opportunity to call on the social partners for wage moderation, the result of recent negotiations on salaries in the public sector in Germany hardly seems likely to reassure him about the risks of inflation. On Saturday afternoon, the European Trade Union Confederation (ETUC) predicted that over 30,000 European workers would take to the streets of Ljubljana for a demonstration on the theme of purchasing power.
The working lunch between the 27, to be attended by the president of the European Investment Bank (EIB), Philippe Maystadt, and the president of the European Bank for Reconstruction and Development (EBRD), Jean Lemierre, will be devoted to the financial situation of the Western Balkans. The working session will then focus exclusively on analysis of the current economic situation and on financial stability. After the conclusions of the European Council (EUROPE 9623), ministers will hold an exchange of views with Baron Alexandre Lamfalussy, former Chairman of the Committee on financial market regulation. They will also look at the review of the “Lamfalussy” process (mainly with a view to improving cooperation between national control authorities within European committees - CERVM, CEIOPS and CEBS), which was the subject of a roadmap adopted by the Ecofin Council last December (EUROPE 9557).
Ministers will sign a memorandum of understanding (MoU) on the management of crossborder financial crises to strengthen the first MoU dating back to 2005 (EUROPE 8948). In Porto, in September 2007, the ministers had taken stock of actions conducted since the drafting of the first MoU and on the simulation exercise of a crisis on the financial markets in September 2006 (EUROPE 9262). They agreed on nine common principles for crisis management (EUROPE 9503). The new document, to be adopted on Friday, will comprise general principles, practical guidelines on crisis resolution and an analytical framework for processing responses.
The debate will end with a discussion on the infrastructures of the financial markets. Ministers will above all discuss developments in back office operations as part of the voluntary code of conduct on clearing and settlement signed in November 2006. They will also look at the Target-2-Securities initiative, the ECB project that will allow banks to settle their securities transactions in euro on a single platform by 2013.
The next day, Saturday 5 April, debates will cover improvements to the quality of public finances, mainly with regard to the efficiency and effectiveness of social spending. Professor Tony Atkinson of Oxford University will address the ministers.
Finally, ministers will prepare spring meetings of the International Monetary Fund (IMF) and the World Bank on 12 and 13 April. The IMF reform package, presented on Friday 28 March by Director General Dominique Strauss-Kahn, mainly foresees a modest rebalancing of quotas. By giving up 1.6 percentage points of their votes to developing countries, the northern countries will still hold 57.9% of the voting rights (compared to now 42.1% for the southern countries). This new breakdown has still to be endorsed by the finance ministers of the 185 member states. It will be presented to them during the spring meeting of the Bretton-Woods institutions in Washington. A first symbolic adjustment of the decision-making power of four countries (China, Mexico, South Korea and Turkey) had been endorsed in September 2006 in Singapore (EUROPE 9268). (A.B.)