Local view for "http://purl.org/linkedpolitics/eu/plenary/2007-09-05-Speech-3-186"
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"en.20070905.21.3-186"2
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"Firstly, I would like to answer Mr Goebbels’s question about why the European Central Bank allocated more money than the US Central Bank. It is because the EU economy is now the largest in the world. This is a great challenge for us all. The fact that the OECD and the European Commission assessed the potential outcomes of the financial problems in the market differently on the same day surprised and saddened me. This means that the European Commission should probably adjust its economic assessment models, especially since they are likely to be based on mathematical methods. It is worrying, as forecasting economic policy is a complicated matter and the instruments used must be flexible.
What should we do now when we meet new challenges? I would not like to comment here on the problems that arise; my fellow members have done this so well. I would just like to emphasise one point. Firstly, the crisis occurred because of the aggressive monetary policy within the EU’s boundaries when it was attempted to solve the problems of the Internet bubble. Thus we cannot influence various decisions of third countries. We can strengthen the dialogue and cooperation with supervisory bodies, but the European Union faces a dilemma: a global merger of financial institutions is currently taking place and it is possible that we will no longer have a single market. We will have a transatlantic market in the area of securities; perhaps we will have some other market in the area of insurance. This means that we need to decide whether we consider Europe to be a single market and require all agreements to be made at European level. Can we accept pilot projects when one of our markets enters the world stage independently? We need agreement on this, otherwise it will be very difficult to manage this crisis.
I would like to emphasise one more thing. Financial markets are under reconstruction. We ourselves acknowledged the role of non-banking institutions in the SEPA Directive. We need to admit that various Islamic banks and foundations are appearing and finally that trading networks are entering the financial market. Thus the regulation of non-banking institutions is also necessary – common regulation, which would make the rules of the game the same for both banking and non-banking institutions. This is today’s reality.
The third issue that I would like to emphasise is that I am worried that we use only risky models as a basis. This principle of risk assessment has proved to be very subjective, and I therefore have doubts about the Solvency II and Basel II directives. We cannot trust rating agencies; we can criticise them, but the problem will remain. We should trust market instruments – that is, liquidity. If we cannot sell particular securities on the market or if they are rarely traded, no rating agency can evaluate them. This should be properly understood and we need to reduce the dependence of our legislation on the opinions of rating agencies.
To conclude, I would certainly like to say that there is no need to rescue financial institutions. I can say from my own experience after the financial crisis in Lithuania that when bankers spend a couple of weeks in prison they very quickly understand how to manage banks."@en1
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