Local view for "http://purl.org/linkedpolitics/eu/plenary/2008-09-24-Speech-3-238"
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"en.20080924.31.3-238"2
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"Madam President, Commissioner, ladies and gentlemen, we are witnessing the end of an era. The next few years will change the face of world finance as we know it. We have to deal not only with the US crisis but with a crisis affecting the international financial system and sparing no region of the world.
We must also reform our financial system along two main lines: the first is prompt legislative and regulatory measures to restore the transparency of the financial system and make financial players accountable. With this in mind, on 13 September 2008 Ministers showed their determination to speed up the implementation of the roadmap adopted in 2007 to respond to the initial signs of the financial crisis. This roadmap sets out four key measures to address the financial turmoil: transparency, prudential rules, the valuation of assets and the functioning of the markets, including credit rating agencies.
It is now time to deliver on the supervision of credit rating agencies, the revision of banking controls and the adaptation of accounting standards, which have undoubtedly played a procyclical role in the financial arena. This is a real priority for the French Presidency and we will discuss it at the next European Council. The Commissioner will confirm this, but I believe that the Commission will shortly propose that the directives in force since 2006 concerning the requirements for own funds should be amended.
This is one of the measures currently under way in various areas to tackle the financial turmoil, which, of course, also include the recent recommendations drafted by the Financial Stability Forum. I know that the Commission will able to table these proposals very quickly and we are counting on Parliament to reach an agreement with the Council at first reading, before the end of the present term, on these urgent proposals.
A proposal concerning credit agencies is also expected from the Commission in a few weeks’ time. It will follow on from the request issued by the July 2008 Council of Finance Ministers and, in this regard too, I am counting on Parliament to reach an agreement on this ambitious proposal as quickly as possible.
I also note with satisfaction that a decision has been taken to set up a working group to examine how the prudential supervision of banks and insurance companies should take account of the cyclical nature of developments, particularly as regards capital. Specific measures should also follow.
These are the essential components of financial sector reform and will most probably be accompanied by other initiatives, as European examination of the financial crisis progresses. Parliament must play its full role in this examination and the Presidency notes with great interest the recent contributions the institution has made. I am thinking, in particular, of hedge funds, which some experts say could be the next victims of the crisis. I am also thinking, as I said earlier, of the issue of accounting standards but also that of financial sector salaries, on which we must take immediate action.
Saying, as I have heard from some European leaders, that we must continue in our laissez-faire approach and that no regulation is necessary is a mistake. It is more than a mistake: it is an assault on the stability of the financial system; it is an assault on reason. I shall be plain about this: if we need to consider regulating hedge funds, then the European Union must do so. We must think about the transparency of risks, the supervisory powers of regulators and the salaries at this type of institution.
The second basic line of approach is to strengthen financial supervision. The Finance Ministers welcomed the agreement by the European committees of regulators on the harmonisation by 2012 of the requirements for data transmitted by European banks to the supervisory authorities. These are the first significant results, but they must be followed by others, and the Ministers have agreed to continue their efforts to improve the coordination of the monitoring and supervision of financial players. The Presidency is ready to work with Parliament and the Commission to strengthen the integration of supervision and prudential monitoring of groups that are increasingly cross-border in nature. The Union requires a more effective and more integrated supervisory system in order to be better equipped to tackle financial crises.
Ladies and gentlemen, France is presiding over the Council of the European Union at a time of great disruption. In these difficult circumstances, we are fully aware of our responsibilities. The time has come to take important decisions with regard to the organisation of our financial system, its place within the European economy and its role, which should remain the financing of businesses and individuals.
The Union has not been idle over these last few months. The Presidency can therefore draw on the reflections made and work carried out by the Commission in this area, as well as on the work of a number of experts, including, in France, Mr Ricol.
For a number years, there had been criticism of the growing imbalances in the financial sector: an unreasonable exposure to risks for many players, the relative inability of financial controllers to keep in check the rapid introduction of increasingly complex financial products and, as the Commission will no doubt mention, a taste, too marked for some, for greed. Now we are seeing the results. The US financial sector is in turmoil and the US authorities have been forced to intervene more and more heavily to avert a full-scale crisis. Europe and the rest of the world are experiencing fallout from this crisis at a level not known since the 1930s.
The October European Council provides an opportunity to set strict guidelines at European level: that is our aim. It is clear that Europe should not act alone. It needs to be proactive and encourage fresh international cooperation, as President Sarkozy said at the United Nations yesterday. We also propose to hold an international meeting before the end of the year involving the G8 and their financial regulatory authorities. Our goal is to help to produce the first principles and new joint international rules for an overhaul of the international financial system.
The European Union is showing, through an initiative of this kind, the importance it attaches to a new, balanced world governance. The European and international response must address the short, medium and long term. In the short term, we need emergency measures; in the medium term, a revision of our legislation; and in the long term, a more comprehensive examination of the role of our economic model in terms of growth and employment and the continuation of structural reforms, which remain essential.
This concludes the information I wished to provide you with today.
The French Presidency is convinced that the events of the past few days make a strong and united Europe even more necessary on the economic and financial stage. We must first come up with an immediate response to the financial disruptions. In the European Central Bank the Economic and Monetary Union has a powerful central bank that has been able to intervene promptly, resolutely and effectively when tensions have been at their highest, in close cooperation with the other major central banks. This is a considerable asset in these turbulent times and we should praise the actions of the European Central Bank, which is ready to step in in any situation.
Faced with the worsening disruption of the last few days, the regulatory authorities in the majority of Member States have decided, like the US authorities, to issue a temporary ban on short sales. This is an emergency measure, but it is welcome as it can help to the calm the tension on the markets.
At present, we do not envisage the type of initiative just announced by the US federal authorities for the large-scale buy-back of ‘toxic’ products held by financial players, and Mr Almunia was right in what he said in this regard.
The Union’s financial system remains robust overall and there is therefore no call for this type of measure, but we must remain vigilant, and nothing can be ruled out in the name of whatever ideology. Realism and pragmatism are the order of the day. If necessary, we will have to address possible systemic risks using the means at our disposal.
Emergency interventions by central banks and regulators are vital, but all experts recognise that they cannot resolve the crisis by themselves. Europeans must face up to their responsibilities and intervene in the other areas in question.
We must respond to the economic slowdown. This was the subject of the joint European approach adopted by the Ministers of the Economy and Finance at an informal Council in Nice. The Ministers, together with the Commission and the President of the European Central Bank, decided to leave the automatic stabilisers to operate freely as regards budgetary matters in those Member States with room for manoeuvre.
They also approved a finance plan for European SMEs, with EUR 30 billion to be provided by the European Investment Bank between now and 2011, which will lend the sector substantial support, as, paradoxically, even though the financial crisis in Europe is less pronounced than in the US, there are just as many risks to the real economy. A stable financial system and robust banks can be called on to restrict or to increase the cost of loans as necessary, particularly in the case of SMEs. Direct action was required with regard to the latter."@en1
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