Brussels, 10/10/2008 (Agence Europe) - I believe that the resistance that existed at the ECOFIN Council on Monday and Tuesday continues to exist, explained Italy's Permanent Representative to the European Union, Ferdinando Nelli Feroci, to this newsletter in connection with the idea being promoted by Italy of setting up a European bank rescue fund. If this is the case, the ambassador said he didn't feel it would be necessary to submit the idea to the European Council. Despite the practical difficulties inherent in such a project, Italy still believes that such a bailout fund would be an important measure in order to send a strong political signal to the financial markets, which were still panicking on Friday.
Will the EU be capable to speaking in unison to provide solutions to the financial crisis? Ferdinando Nelli Feroci hoped that the European Summit would be capable of sending the following message: measures taken at national level should not create an uneven playing field (Italy announced on Wednesday that it is setting up a national fund to recapitalise struggling banks and boost its national deposit guarantee system, Ed.); rapid progress is needed on issues already on the table (like revising banking and insurance regulations) or rules that are in the process of being drawn up (like accountancy rules, deposit guarantees and management pay packages). Ferdinando Nelli Feroci said that he was awaiting a strong message on the impact of the financial crisis on the rules in force for state aid, competition and the Stability Pact. Believing that a degree of flexibility in the way rules were interpreted was possible on the strict condition of remaining within the existing regulatory framework, he warned, however, that the temptation should be avoided of taking advantage of this situation to free oneself of a number of rules that are, in Italy's opinion, essential for the proper functioning of the single market.
Asked about changes in the supervision of cross-border financial institutions, Ferdinando Nelli Feroci mentioned the 'ferocious debate' between countries where the headquarters of pan-European companies are based and countries housing subsidiaries of the same companies, notably in connection with the Solvability II Directive on insurance (see EUROPE 9757). Italy believes 'a system centred on the idea of colleges of supervisors' could be a good solution, he said, believing the model of a European supervisory authority to be difficult to put into practice at the moment. Ferdinando Nelli Feroci said that once the financial crisis was over, politicians would have to take their responsibilities on board and dictate new rules for the financial system. (M.B. transl fl)