Brussels, 29/09/2009 (Agence Europe) - European Union finance ministers and central bankers are to meet informally on Thursday 1 and Friday 2 October in Gothenburg in a context that is still heavy marked by the economic crisis despite fragile signs of recovery. Their work will focus on finalising coordinated national strategies for overcoming excessive public deficit, as well as on reform of the European system of financial supervision, and the funding of measures to combat climate change.
Exit strategies. In a document forwarded to member states, the Swedish Presidency states that, at the present time, it is appropriate to maintain expansionist macro-economic policies until recovery is assured Nonetheless, it continues, the time has come to begin discussion on how to achieve standardisation of monetary, budgetary and financial policies. Each member state will develop its strategy for overcoming the deficit heightened by the funding of social policies and measures to kick-start the economy. Coordinated at European level and in accordance with the Stability and Growth Pact, such national strategies will differ from each other in their nature and timetable. Sweden identifies several elements that such strategies should incorporate: - exceptional measures should be withdrawn at the appropriate time; - budgetary consolidation will be carried out at a rate of more than 0.5% of GDP for the EU as a whole and will extend largely into the next decade; - and structural reforms will intensify and focus on the labour market, retirement systems, investment in research and green technology.
Reform of the financial system. The Swedish Presidency hopes to tackle the legislative package on reform of financial supervision presented last week by the European Commission (see EUROPE 9983). “We must strengthen macro-economic supervision” to detect “bubbles” and the national supervision authorities must cooperate better at micro-economic level, the Swedish finance minister, Anders Borg, said on the website of the Swedish Presidency. In a concern to reach a complete political agreement during the European Council in December, Sweden foresees the timetable for talks as follows: - at the October Ecofin Council, a political agreement must be reached on the proposal to create a European Systemic Risk Committee responsible for raising the alarm on macro-economic risks threatening financial stability (interim report planned for informal European Summit); - parallel discussion on the creation of three European micro-economic supervision authorities in securities, banking and insurance so that agreement can be reached at December's Ecofin Council.
Increased cooperation in the event of the failure of a cross-border financial institution, a corollary to improved financial supervision, requires the setting up of a stronger regulatory framework. At the present time, this framework consists of a simple, unbinding Memorandum of Understanding (MoU) amended in 2008 (see EUROPE 9503). Ministers and central bankers will hold an exchange of views on how to take forward this issue following a presentation of the work carried out by the Council Economic and Financial Committee. The Committee of European Banking Supervisors (CEBS) will report on the “stress tests” carried out on the large European banking groups. This positive CEBS report shows that the European banking system will be able to bear a further deterioration of economic conditions, Reuters reports. The informal Ecofin will also take stock of on-going work on accounting standards, and in particular on how to mitigate their procyclical nature and the creation of fair rules of the game between European companies and their US counterparts.
Climate change. With the UN Copenhagen conference in mind, the Swedish President wants to increase discussions with a view to determining they outlines of a European position on how to fund the fight against climate change. This funding would be to help developing countries to help them meet greenhouse gas reduction commitments that they will be asked to make in Copenhagen. In June, finance ministers set out two principles which should serve as the basis for calculating the contributions of industrialised countries: states' ability to contribute and their responsibility in terms of greenhouse gas emissions (see EUROPE 9918). European finance ministers will also be asked about the review of directive 2003/96/EC on taxation of energy products. Taxation Commissioner László Kováks said last week that the Commission was considering amending the directive to bring an element linked to CO2 emissions into taxation of energy products not covered by the greenhouse gas emissions trade scheme (ETS). (M.B./transl.jl/rt)