Local view for "http://purl.org/linkedpolitics/eu/plenary/2007-10-24-Speech-3-443"
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"en.20071024.42.3-443"2
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Mr President, what I have to say on this issue is as follows. At the informal meeting of EU Finance Ministers and Central Bank Governors which was held in the Portuguese city of Porto on 14 and 15 September, various issues were discussed, including developments in the economic and financial situation.
A work programme was therefore defined with a timetable for this and other actions to be carried out in order to reinforce the effectiveness of the financial stability mechanisms in the European Union. Clearly, all this work is intended to protect consumers and investors who depend on the proper functioning of the financial markets.
Please allow me to conclude by highlighting that, as I understand it, the Council, together with the European Parliament and the Commission, subscribes to the goal of achieving effective levels of prudential supervision and regulation in order to ensure financial stability, global competitiveness and consumer protection.
As indicated on the Portuguese Presidency’s website, our assessment is in two parts. On the one hand, we believe that we are experiencing a period of volatility and re-appraisal of risk in global financial markets, triggered by difficulties in the subprime mortgage market in the United States which have been passed on to the global financial system through complex financial instruments.
The functioning of the money markets has also been affected and this has required prompt and firm action by the main central banks, including the European Central Bank. On the other hand, although it is undeniable that the financial turbulence has heightened uncertainty about economic prospects, the macro-economic fundamentals in the European Union are strong and world growth remains robust, despite the slowdown in the US.
European financial institutions appear to be strong and their healthy profitability in recent years ensures that they are in a position to weather the current period of increased volatility in the financial markets.
However, I would point out that specific cases in the Member States were not discussed. During this assessment, we also discussed the lessons that may be drawn from recent financial market volatility. It was stressed that, although we have a sound regulatory and supervisory framework in the financial sector which has been reinforced by recent legislation such as the implementation of the Capital Requirements Directive and by the work in hand on the Solvency II Directive, we must remain alert, particularly in light of the rapid and innovative developments in the area of financial products.
Accordingly, the recent episode of financial turbulence has increased the urgency of certain issues which are still on the Council’s agenda and has heightened the need for the European Union to find, alongside its international partners, ways of reinforcing transparency, improving valuation processes, continuing to reinforce risk management and improving market functioning, particularly with regard to complex financial products.
The Ecofin Council on 9 October agreed on a detailed work programme to be carried out until the end of 2008 by relevant bodies at EU level, in strict cooperation with the main international partners.
At the same Ecofin Council meeting in October, conclusions were also adopted on reinforcing financial stability mechanisms in the European Union. These conclusions are available on the Council’s website and are the tangible result of over a year’s preparation. In particular the Council adopted a set of common principles to guide cooperation between national authorities in the area of financial stability.
In addition, it was agreed to extend the Memorandum of Understanding on Cooperation and Exchange of Information signed in 2005 between EU Banking Supervisory Authorities, Central Banks and Finance Ministries in order to include three new elements: firstly, the common principles formally adopted at the meeting; secondly, a common analytical framework for the assessment of systemic implications of a potential crisis and, thirdly, common practical guidelines on procedures to be followed in potential cross-border crisis situations."@en1
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