Local view for "http://purl.org/linkedpolitics/eu/plenary/2010-10-19-Speech-2-439"
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"en.20101019.22.2-439"2
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"Mr President, good evening to each and every one of you. I have just this minute arrived from Luxembourg, Mr President, where the Council of Economic and Finance Ministers met and reached unanimous agreement on the draft directive on hedge funds and private equity.
The analysis made by our Commission and the Basel Committee shows that the new regulations will strengthen financial stability, limit pro-cyclicality and lead to significant economic and social benefits for a wide range of stakeholders, thanks to the expected reduction in the frequency of banking crises and the risks they entail. In particular, this reform will benefit borrowers, companies and individuals, but also creditors, governments, small and medium-sized enterprises and our citizens in general.
Admittedly, these benefits will only become apparent over time because of the gradual introduction of the new regulations and the transitional clauses announced by the Group of Governors and Heads of Supervision on 12 September 2010.
The same applies to liquidity requirements. Liquidity regulations are subject to an observation period until 2015. Mrs Kratsa-Tsagaropoulou asked me if the new rules will accelerate mergers between banks; that is not the aim of the reform, but if some banks failed to comply with these new regulations on time and therefore had to merge with their competitors or even their partners, that would lead to greater protection for their depositors and creditors, and to increased financial stability.
I also understand your concern that the new regulations will disproportionately affect smaller banks. The quantitative study carried out by the Committee of European Banking Supervisors on the impact of Basel III on the banking sector has shown that small banks, Mrs Kratsa-Tsagaropoulou, would, in fact, be less affected by the new regulations than the top 50 banking groups of the European Union. This is mainly due to small banks’ higher level of initial capitalisation and their simpler business model.
Finally, the Commission attaches great importance to establishing fair competition at international level. At this stage, I do not consider it advisable for the G20 to open another major debate on all the regulations defined in the context of Basel III because these were the result of lengthy, balanced discussions. On the other hand, the political governance of the G20 and the Financial Stability Board are a tool for Europe, enabling it to ensure that everyone will effectively implement the Basel accord properly and on time. That is what I can say in answer to your very important question.
I am mentioning this now before Parliament because this draft document, which will remain a draft until you have debated it here yourselves, owes much to the European Parliament, to the work of your rapporteur, Mr Gauzès, and to the many amendments tabled and included for the Council of Ministers’ final vote, particularly those related to the financial supervision package which, too, owes a great deal to the European Parliament’s contribution.
Naturally, we will now work together with Parliament in order to finalise the agreement on the regulation of hedge funds and private equity. This is the first time that this sector will be subject to European regulation, and I would like to thank you already for the part you have played in this draft directive.
Mrs Kratsa-Tsagaropoulou asked me about the discussions that are under way in Basel and which are connected with the issue of regulation that I have just mentioned. Banking reform is a very important issue and, once again, I welcome Parliament’s commitment, shown by the excellent work of Mr Karas; we talked about that here two weeks ago. You will be asked to give your opinion on the proposed Capital Requirements Directive 4 that will be presented in spring 2011 to implement the Basel III accord in Europe.
Ladies and gentlemen, it is an understatement to say that we have encountered and are still facing an unprecedented financial crisis that is not over yet. According to the International Monetary Fund, bank losses attributed to the crisis amounted to EUR 2 300 billion at the end of 2010, of which half has come from European banks. This crisis, which began in the financial sector, has plunged the European economy into severe recession. European GDP shrank by 5.7%, or EUR 700 billion this year alone.
We need to restore confidence and stability in the banking sector, and ensure that credit continues to fuel the real economy, business, employment and growth. The European Union and Member States adopted an unprecedented set of emergency measures that were, at that time, not so long ago, funded by the taxpayer. The Commission thus approved 4 100 billion of State aid amounting to 35% of the European GDP. Combined with fiscal policies designed to bring Europe out of recession, these support measures have fuelled the deficit and public debt.
Ladies and gentlemen, it was the citizens, the taxpayers, who paid once – will they pay a second time? I do not think so, and I hope not, because that would not be fair. Our policy is foresight, because prevention is always cheaper than cure. We need to prevent the crisis and its disastrous effects from occurring a second time, and it is precisely in order to carry that need for foresight and prevention over into our prudential policies that we will be introducing the Basel III regulations in Europe.
It is in the same spirit that we want to provide Europe with a prevention framework for resolving banking crises, which, again, will be based on Parliament’s opinions. I am thinking, in particular, of the work undertaken by Mrs Ferreira.
The G20, in its decision of 2 April 2009, made the Basel Committee on Banking Supervision responsible for making in-depth improvements to the Basel II regulations where necessary, in order to strengthen banks’ resilience and improve financial stability. EU leaders expressed their support for this goal on 19 and 20 March 2009. The Basel III regulations were drawn up in the Basel Committee by experts from the regulatory and supervisory authorities of the 27 major international banking markets, with the Commission’s very active participation on behalf of all Member States of the European Union."@en1
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