Local view for "http://purl.org/linkedpolitics/eu/plenary/2002-01-17-Speech-4-161"
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"en.20020117.9.4-161"2
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"Madam President, in deference to your international linguistic approach, Commissioner, I will refrain from speaking in my national language and use the lingua franca of our epoch – English.
I pay tribute to your valiant rendering, not only of the English language – in which you have no problem – but also of the specialised terminology of the financial markets, which probably caused you more throatache than the language itself.
You paid tribute to the modernising efforts of the financial services programme. Indeed it is a remarkable programme, which has to succeed if we are going to have a unified and integrated capital market in Europe – a great competitive advantage for an economy.
However, the word "modernise" can be such a terrible weasel word at the same time. Many things can be cloaked in modernism. In this particular case there is an upside, insofar as the integration of capital markets is helped; at the same time, however, the increasing leverage of financial institutions, inter alia, has already given rise to various risks will do so in the future. There have to be ways of strengthening control of those risk-management models which banks will use in order to assume control. Such models are very costly and hard to control. When I say "control" I do not mean control in the old-fashioned bureaucratic sense. New methods have to be invented for checking on these models so that they perform in a way that helps the banks perhaps to leverage more while at the same time keeping them in check. If they are not kept in check the risks could be very substantially increased.
The other risk in this area is that we create a risk-management divide where big banks and big financial institutions will have all the means at their disposal to engage in modern risk management. Meanwhile, small banks will become more and more marginalised in this respect and be increasingly burdened with costs which the bigger institutions have managed to shrug off.
If indeed a way out is to be sought through partial application to small banks, this may exacerbate the lack of transparency in the whole area. The recent Enron debacle offers a sobering lesson in what a lack of transparency could provoke.
Therefore our advice would be to temper a little the enthusiasm for surrendering control to the markets, while building up the official control side a bit more and applying it in a modern way using modern methods. Such methods might, in the short term, limit profitability, but if they are to spare us a couple of Enron-type disasters in the long run, they will more than compensate for any reduction in short term profit."@en1
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