Brussels, 20/03/2009 (Agence Europe) - The European Council will make the first decisions on the reform of the European financial supervisory system in June. The proposals from the European Commission, expected at the end of May, will draw heavily from the work of the high level expert group chaired by Jacques de Larosière de Champfeu. Further legislative proposals will follow in the autumn.
“We decided that the June European Council will establish the new financial supervisory system for the European Union, to resolve the current crisis and begin a future of greater confidence in the financial system,” said Spanish head of government Luis Zapatero. French President Nicolas Sarkozy said the decision to make the de Larosière report a legislative measure by the end of the year was a “novelty”. “Europe is not suffering from a shortage of rules, but of sanctions. It's historic, because for years we have been unable to break free from weak supervision,” he added. UK Prime Minister Gordon Brown said that strengthening financial regulation was necessary and should be coordinated, but national supervision remained every bit as necessary. France and Germany, backed by the Commission, are very keen on this approach, and most delegations, including Dutch Prime Minister Jan Peter Balkenende, spoke along similar lines, a diplomat said the previous day.
In its conclusions, the European Council charges the Ecofin Coucnil with examining the de Larosière report and the Commission proposals. The two most striking recommendations of the de Larosière group on financial supervision, made public at the end of February, relate to: - setting up a European Council on systemic risk, under the aegis of the European Central Bank, the role of which will be to provide sufficiently early warning of macro-economic risks and provide recommendations on how to prevent crisis; - the creation of a European system of supervisors in the area of micro-prudential supervision, by turning the three European committees of national financial regulators (CESR, CEBS and CEIOPS) into real, independent European authorities, with extended powers (see EUROPE 9848).
The new system will give the Member States' authorities a big role, particularly the countries of Central and Eastern Europe, where subsidiaries of pan-European financial institutions will be based. The European Commission includes these recommendations in its report to the Spring Summit.
The European Council also hoped immediate progress would be made on the European Commission's new draft legislation on hedge funds, capital investment funds, executive pay and increasing banks' own funds requirements.
Tax havens. Europe's leaders discussed the question of the blacklist of uncooperative countries on tax matters (tax havens) that will be discussed at the London G20 Summit on 2 April (see related article). The British prime minister, Gordon Brown, said that Luxembourg, Switzerland, Austria and Hong Kong had recently announced that they will share information about taxation, if requested, and are considering signing bilateral agreements. Austria's decision to join the tax information exchange system is a “step in the right direction” commented Peer Steinbruck, who said that Austria and Switzerland would not be included on the blacklist if they accepted OECD tax information exchange rules. Nicolas Sarkozy commented in this connection that the EU27 agreed unanimously that Luxembourg, Austria and Switzerland should not be included on the blacklist if they respect OECD rules in practice. Sarkozy said he was the French Co-Prince of Andorra and Andorra had said it will respect the rules. The credibility of the EU's moves will depend on its ability to ensure there are no exceptions, added Sarkozy, who will be discussing the issue with President Obama of the United States on Monday 23 March 2009.
Welcoming the fact that Luxembourg is no longer a potential candidate for the blacklist of uncooperative countries, the country's prime minister, Jean-Claude Juncker, said that in the future, no financial products or players should be able to act proper monitoring and supervision. The Chancellor of Austria, Werner Faymann, said that many delegations recognised that Austria, Luxembourg and Switzerland had made important steps in agreeing to the OECD rules, said. He said it would now be a question of monitoring the way the promises were implemented. Belgium's finance minister, Didier Reynders, pointed out that Belgium is not on any tax haven blacklist, and Belgium would be adopting the exchange of information rules from the EU's savings tax directive by 2010. (M.B. / A.N. / B.C. / E.M. trans fl)