Brussels, 14/10/2009 (Agence Europe) - On Tuesday 20 October 2009, EU finance ministers will adopt a conclusions document on strengthening mechanisms at EU level to prevent, manage and resolve crises arising from the collapse of a financial institution that is active in more than one country. According to a draft document that Europe has seen, the ministers will ask the Economic and Financial Committee (EFC) to write a 'reflection document' to guide discussions in December 2009 because progress has to be made on this issue alongside the current work on financial supervision.
An EFC report submitted to the meeting of finance ministers in Göteborg identifies two areas of action for managing cross-border crises - improving the crisis management regulatory framework by developing common and interoperable mechanisms (for which draft legislation will be required); and strengthen action the event of a financial crisis breaking out (for which legislation will not be necessary). The Council will welcome the two-pronged approach as covering the respective responsibilities of the EU bodies, institutions and committees. With regard to the devising of common mechanisms, the ministers would favour the idea of the European Commission issuing a report, possibly next week, on bank resolutions. The report would be the start of a public consultation exercise and cover all areas of cross-border financial crisis management like the existence of preventive mechanisms; crisis management proper; and the restructuring or winding down of a cross-border institution (see EUROPE 9981). The Council would also favour the idea of publishing a draft directive at the start of next year to amend Directive 1994/19/EC on savings guarantee systems. The draft legislation would have to look into the idea of a pan-European savings guarantee system, and the Commission would be asked to review, as part of the current 'single passport' system, the links between supervisors from countries of origin and host countries in monitoring the subsidiaries of multinational companies.
The finance ministers will also discuss other ways of strengthening action in the event of cross-border financial crises like beefing up preventative measures (carrying out regular EU stress tests) ; full implementation of the Crisis Management Memorandum of Understanding (MoU); creating cooperation mechanisms between Member States' governments; and developing a 'credible alternative' to financial aid from the state through rules to make it easier to wind down multinationals and contingency planning. On burden sharing among Member States, the Council will call on the EFC and the Commission to explore the pros and cons of measures taken in advance of crises and measures after the event, along with the principles, criteria and procedures that might apply if public aid is required. (M.B. trans fl)