Brussels, 24/09/2008 (Agence Europe) - On Wednesday 24 September 2008, MEPs, the French Presidency of the EU and the European Commission discussed the crisis in the global financial system and the impact of the crisis on the EU economy.
The impact is before everyone's eyes - the US financial system is in turmoil, there is increasing intervention from government authorities, and Europe and the rest of the world are suffering the consequences, explained French secretary of state for European affairs, Jean-Pierre Jouyet. Strongly believing these events increased the need for a strong, united EU in the economic and financial fields, Jouyet nevertheless ruled out any EU initiative along the lines of the bank bail-out plan estimated at around US$ 700 billion currently being prepared in the United States. He welcomed the role played by the European Central Bank but said that insufficient capital had been injected. Jouyet said the EU legislators should take action, adding that claiming that laisser-faire should continue was an error against reason and financial stability. The reforms to be carried out at EU level are two-pronged: 1) controlling the work of credit rating agencies, revising the Basel II Directive on capital adequation for banks, and adjusting the accounting rules that increased the impact of the crisis and regulate hedge funds (the French Presidency welcomed the recommendations of the Rasmussen Report adopted by the EP the day before - see related article); 2) beefing up the EU supervisory framework for financial institutions. On the latter issue, EU finance ministers agreed earlier this month at their meeting in Nice (see EUROPE 9740) on the direction EU legislation should move in. Jouyet echoed the words of French President Nicolas Sarkozy during his visit to New York (see related article), who hoped the October 2008 European Council summit would decide on 'strong guidelines'.
EU Economic and Monetary Affairs Commissioner Joaquín Almunia believes the current financial crisis, which has so far led to losses equivalent to 500 billion US dollars (the size of Sweden's gross domestic product), would lead to profound changes in the international financial landscape. He welcomed the US bank bail-out plan. He mentioned current EU work on a financial stability roadmap which, he said, contained all the necessary ingredients (see EUROPE 9744), adding that the supervision model had to be put to work. Next week, the European Commission will unveil a draft directive to revise the Basel II Directive and, in October 2008, will unveil rules to cover rating agencies. Almunia stressed the need for Member States to respect the revised Stability and Growth Pact and continue with their structural reforms.
German MEP Alexander Radwan, speaking on behalf of the EPP-ED, said the only part of the equation that was acting fast was the market, unlike the Council and especially the European Commission. He called for the EU to speak with its own voice regardless of what the US authorities might think. He sarcastically asked whether Charlie McCreevy was trying not to precipitate matters, referring to the EU Internal Market Commissioner's statements on possibly regulating hedge funds and capital investments funds. Radwan said the problem was not McCreevy, but the President of the European Commission. German PES MEP Martin Schultz launched an attack on all fronts - it was the bankruptcy of a system based on speculation that Radwan had defended, he said. Schultz said that perhaps Commissioner McCreevy was spending a day betting at the races. Schultz accused the Liberals of speaking with what he thought was a language of the past when it was used by Socialists at the end of 2007. Schultz, President of the Socialist group, said that at the end of the day the losses had been nationalised and the profits had been privatised.
In this situation, the true losers are not brokers and leaders but ordinary people whose savings and pensions are at risk, said Germany ALDE MEP Silvana Koch-Mehrin. She said the answer was not to scrap the market but rather to ensure that the rules are transparent, drawn up internationally and respected in order to avoid excess. For the UEN group, Eoin Ryan said that EU decision-makers had to keep their sang froid and legislate without panic because panic would only lead to the wrong decisions being taken. Get out of your bubble and put yourself in the position of ordinary people, said French Communist MEP Francis Wurtz, accusing political decision-makers of encouraging diabolic mechanisms that had become impossible to manage. He urged politicians to make a true break with the past and to move away from total reliance on the financial markets to fund the real economy. He said the ECB could play a greater role here. Wurtz called for the movement of financial capital to be taxed and for the global economic institutions to be reformed. The banks have to find solutions to this crisis, rather than taxpayers doing it for them, said Hanne Dahl (IND/DEM, Denmark), unhappy that the small Danish bank where she had invested her savings had also been hit by the financial crisis. (M.B. / transl. fl)