EU regulating financial markets

The Ecofin Council 8 June has issued a report to the European Council 17 June 2010 on regulation of financial markets:




Ecofin Report - Preparation of the European Council on the state of play on measures in the financial sector in response to the crisis (document 10861/10; 17 pages)


According to the Ecofin Council, by taking forward this ambitious programme of reform and by setting clear and differentiated priorities, the European Council would demonstrate Europe's determination to bring about a safer, sounder, more transparent and more responsible financial system which is internationally consistent and in line with the G20 Communiqué of 5 June 2010.





The issues dealt with are:


I Financial exit (from banking sector support regimes)

II Financial supervision (banking, insurance and securities markets)

III Crisis management (EU policy coordination framework; EU regulatory framework for crisis prevention, management and resolution; introduction of a levy on financial institutions;

IV Market infrastructure (credit default swaps; OTC derivatives markets;credit rating agencies)

V Other financial regulatory measures (prudential regulation of financial institutions; extending regulation and supervision to all significant financial actors; improving eurozone fiscal surveillance; Commission's Communication "Regulating Financial Services for Sustainable Growth")



The last five pages are dedicated to a discussion about EU common grounds on levies for financial institutions.




Ralf Grahn

Tracking eurozone crisis measures: Financial supervision and better governance in motion

Even if the Greek aid package and eurozone stabilisation are the main focus of our tracking exercise, financial regulation and supervision are related areas worth mentioning.

On 12 April 2010 the European Central Bank (ECB) and the European Commission held a joint conference on financial integration and stability, the legacy of the crisis (IP/10/417).



The ECB president Jean-Claude Trichet reminded that the financial supervisory framework in the EU will be based on two pillars. The micro-prudential pillar, the European System of Financial Supervisors (ESFS), will be composed of the national supervisors and three European Supervisory Authorities (ESAs). The European Systemic Risk Board (ESRB) will form the macro-prudential pillar.

According to Trichet, the ECB stands ready to support the ESRB:

in particular taking into account the important presence of the members of the General Council of the ECB in the ESRB and the fact that the ECB will provide the secretariat and analytical, statistical, logistical and administrative support to the ESRB, as required under the legislative proposals. Preparatory work at the ECB has been organised through the setting up of an ad hoc team and is under way so that the ESRB can take up its work after its formal establishment. The ECB is in the process of enhancing its capabilities for monitoring and assessing financial stability risks. Only a number of weeks ago, we reformed our Directorate Financial Stability and Supervision into a Directorate General Financial Stability with more resources.

Internal market commissioner Michel Barnier’s speaking points (in French) stressed the need for proper regulation and supervision of integrated European financial markets.




Further reading: the Commission’s web page on financial services supervision.




On 15 April 2010, Olli Rehn spoke about reinforcing economic governance in Europe (SPEECH/10/160). The commissioner for economic and monetary policy said that the aim of the Europe 2020 strategy is to mobilise growth drivers in order to modernise our social market economies. The second pillar is the consolidation of public finances.

Rehn outlined enhancing economic policy coordination through three main building blocks: reinforcing the Stability and Growth Pact, deepening and broadening economic surveillance and setting up a permanent crisis resolution mechanism.




Ralf Grahn

Merkel and Sarkozy push for EU progress

Today’s meeting showed that Germany’s Chancellor Angela Merkel and France’s President Nicolas Sarkozy want progress at the European Council meeting 18 to 19 June 2009. The press conference was a show of quiet determination.



Merkel and Sarkozy want to push for:

• The nomination of José Manuel Barroso to become the President of the Commission, with a programme, and subject to the approval of the European Parliament, if possible on 14 July 2009.
• Formal guarantees to the government of Ireland on its concerns with regard to the Treaty of Lisbon, and all the help they can give to achieve a positive vote, given that the EU needs Ireland and Ireland needs the EU.
• The entry into force of the Lisbon Treaty, in order to give the European Union a stable framework.
• Financial regulation based on the De Laroisière report, hoping to get the United Kingdom on board.

Merkel stressed the importance of the European Union’s work to secure a deal on combating climate change.


Ralf Grahn