Local view for "http://purl.org/linkedpolitics/eu/plenary/2000-02-17-Speech-4-012"
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"en.20000217.2.4-012"2
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"Mr President, the Socialist Group supports the Commission’s efforts to implement the action plan for financial services. Obviously, in the wake of the introduction of the euro, we need to create an integrated European financial market which is similar to the American and Japanese markets.
The debates on UCITS gave rise to speeches on behalf of all sorts of lobbies and heated debate in the relevant committee. I should like to congratulate the rapporteur, Mr Olle Schmidt, and also Mr García-Margallo y Marfil, for their constructive approach. The Socialists recognise the importance of the investment fund industry to the development of our economies and to the allocation of resources. But the world of international finance is a dangerous one. The capital markets are still at the mercy of their excesses. There is at present a surfeit of cash looking for a home.
In 1999, the increase in the means of payment in the world resulted in over-stimulated stock exchanges and an explosion in the volume of transactions, pushing up the prices of long-term financial and real assets. And as international financial activity speeds up, the risks increase. You do not need a Nobel prize in economics to realise that the current working hypothesis of the financial markets, which anticipate annual growth in profits of the order of 15 to 25% is quite simply unrealistic in the medium term.
I adamantly believe that the main risk to the world economy in the foreseeable future is not inflation, but deflation generated as the speculative bubbles, created by what Alan Greenspan calls irrationally exuberant markets, burst. The legislature has a duty to contain the risk inherent in the continuing deregulation of the European financial markets. By definition, investment funds use other people’s money. The legislator should protect the general interest and introduce safeguard clauses. There is no freedom without rules.
We have done away with so-called master-feeder structures. These feeder funds exist in the United States, which is an area with a single supervisory authority and a single legal system. The European market is still fragmented and such structures would doubtless cause problems. The Socialists, like the Commission, question the advisability of allowing investment funds to invest in so-called over-the-counter derivatives, i.e. products negotiated between professionals by private contract. As these transactions are generally not subject to prudential control, the risks are all the more obvious.
The Socialist Group has tabled amendments proposing both quantitative and qualitative safeguard clauses in order to contain the risks to investors. By adopting these amendments, Parliament will allow recourse to OTC derivatives but will also limit the risk to private investors.
Mr President, there is much talk at present of the principle of good governance. This principle should not only guide the public sector, it should also guide the private sector, especially financial undertakings."@en1
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