Local view for "http://purl.org/linkedpolitics/eu/plenary/2008-10-08-Speech-3-029"
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"en.20081008.14.3-029"2
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".
Madam President, Mr Jouyet, ladies and gentlemen, allow me first of all to make an assessment of the role of the French Presidency of the Council.
In this context let me pay tribute to the ECB, which has shown itself an assured and effective global player, with the euro a key steadying force.
The Commission has played its role to the full. State-aid and competition rules have been shown to be essential to give guarantees of a level playing field. The risk of action in one Member State spilling over with negative consequences for another makes these rules more essential than ever. At the same time the Commission has shown that it is fully capable of acting at speed and with the necessary flexibility. I welcome the fact that this beneficial role of state-aid rules and the way the Commission is applying them is recognised in the Ecofin Council conclusions. The Commission will shortly issue guidance setting out the broad framework within which the state-aid compatibility of recapitalisation and guarantee schemes could be rapidly assessed.
In the legislative area, we will come next week with two proposals. Firstly to promote the convergence of deposit guarantee schemes. Strengthened and more common rules here will be an important part of the exit strategy from the crisis. I am encouraged by the Ecofin Council, which has followed our proposal to at least double it, setting the common minimum threshold at EUR 50 000, with most Member States even going up to EUR 100 000.
Secondly, we will come with a proposal to make sure that European financial institutions are not disadvantaged vis-à-vis their international competitors in terms of accounting rules and of their interpretation. Last week I had a meeting with the representatives of the European banks, who were unanimous in telling me that this was a serious problem for them. The Commission role has been to promote awareness of the need to act and to create political momentum, and it seems that, now, the obstacles raised by some Member States have finally disappeared.
Then there is the medium and longer term: the measures needed to bring stability and sustainability back into financial markets. I have said it before and I say it again: apart from liquidity, we need also to inject credibility into the current economic situation. Fire-fighting is not enough. Here Commission work has been under way since the start of the crisis a year ago.
Member States need to show that we have learnt the lessons needed to build the right regulatory framework to minimise the risks of crisis. Progress on the Ecofin road map agreed last year will need to be closely monitored.
Let me highlight in particular three issues. First I would like the Council and Parliament to give real priority to our proposal of last week on capital requirements. Second, we will come next week with the proposal we announced on rating agencies. Again, I know I can rely on your support to fast-track work on it. Third, we will also review our December 2004 recommendation on executive pay, which unfortunately was ignored by Member States – or, to be fair, only one Member State decided to follow to some extent the recommendations that the Commission put forward in December 2004. This is a good illustration of the kind of resistance we have been facing in this area in the last few years.
The last point is of a more systemic nature. We also need to have a further look at European-level supervision in the single financial market. There are more than 8 000 banks in the European Union, but two thirds of total European Union bank assets are held in 44 cross-border institutes. Some operate in as many as 15 Member States. This is the single market at work – but cross-border banks have to deal with different systems of supervision in each Member State, and national supervisors are not able to address the entirety of the banking activity beyond the national borders. It makes sense to remove the mismatch between a continental-scale market and national systems of supervision. When a cross-border bank is under pressure, finding rapid solutions with several national supervisors in parallel is possible, as the past weeks have shown – but, honestly, it is not easy.
I know that we will face an uphill struggle with some Member States on this. The current debates in the Council on the Solvency II Directive show the large degree of resistance that any attempt at improving cross-border supervision still faces.
What we have proposed in Solvency II and in the Capital Requirements Directive is the strict minimum we need. Indeed, I am convinced we will have to go much further.
As Mr Jouyet has just said, in the midst of the French Presidency of the Council, first there was the crisis between Russia and Georgia and now there is an unprecedented crisis, this global financial crisis. It is a crisis that did not originate in Europe – it came from across the Atlantic – and it is a crisis for which we do not yet, and I stress ‘yet’, have the necessary rules in Europe that would enable us to give a typically European response. I can bear witness to the tremendous efforts the French Presidency and Nicolas Sarkozy have made to find a European response to this emergency.
So it is important to underline this point. When the Commission speaks in favour of a common approach to supervision in Europe, we do not do it because there is any agenda for grabbing more competences. We do it because there is a reality – and the reality is that almost two thirds of the banking assets in the European Union already have a trans-border dimension. That means a European dimension, and we need to respond to this European dimension with a true European solution.
So we need to launch a reflection process in order to build common ground. That is why I will be setting up a high-level group to look at the right architecture to ensure that financial markets are suited to the realities of the single market and that supervisors can work together to meet the challenge of cross-border banks. I am proud to announce to you today that Jacques de Larosière, former Managing Director of the IMF, Governor of the Banque de France and President of the EBRD, has accepted my invitation to chair this group, which will be independent and will consist of high-level experts in the subject matter. I believe their ideas could feed into a general reflection process, hopefully with some solutions for the long term.
The current crisis has shown that we need comprehensive rethinking of our regulatory and supervision rules for financial markets – which include hedge funds and private equity, as highlighted by Parliament. So we will come back to these questions. I only hope that Member States will show – all of them – the same level of willingness as Parliament and the Commission.
Let me recap. In the short term we need to ensure that rescue operations and other public intervention take place in a coordinated and consistent European framework. The speedy application of state-aid rules by the Commission injects confidence between Member States, and we will hence come very rapidly with guidance. We will come next week with proposals on deposit guarantee schemes and on accounting rules.
For the medium term, there are three measures to highlight: last week’s proposal on capital requirements, our forthcoming proposal on rating agencies and a review of our 2004 recommendation on executive pay.
And, in the longer term, the high-level group that I have announced should lay the ground for building consensus on cross-border supervision.
All these measures, together with Member States acting in a coordinated and consistent manner, will show a European Union addressing the real problems. The effect on confidence will be all the stronger if the institutions can show a resolution and a determination to act quickly.
As far as the Commission is concerned, I would like to inform you that I have decided to set up, inside the college, a permanent steering group on the financial crisis, composed of Commissioners Almunia, McCreevy and Kroes, which I will chair myself. I want to keep open lines with Parliament on these questions. I know that Parliament has already signalled its openness to fast-tracking proposals, and I hope that we can work together on this very important and sensitive issue, because financial stability is a public good. We have a duty to show our common determination to face this very difficult and urgent situation.
In all of this, the international dimension is critical, as was just now highlighted by the President of the Council. We need to come with solutions in Europe, but we need also to work with international financial institutions.
I particularly welcome President Sarkozy’s proposal for an international conference. It is the right way forward. The more that public authorities can act in tune, the more effective our action will be, and the less the chance that action will undermine fair competition and the acquis of European integration.
The gravity of the financial crisis is clear to all of us and it is absolutely right that it should be at the core of the European Council meeting next week.
The focus is on the financial crisis, and rightly so. But it would be a mistake to see European grinding to a halt as a result. There are two other areas where we must make decisive progress this autumn. There are in fact many other points but, because of time, I will just concentrate on two issues very briefly: the climate-change and energy package, and the Lisbon Treaty.
First the climate-change and energy package. Those who think that this is not the policy for an economic downturn are making a mistake. The package is central to Europe’s future prosperity. Without it there will be higher costs later, we will be more vulnerable to energy shortfalls, and we will lose the chance of exploiting some big new markets. Of course industries are worried that change will bring extra costs. This is completely understandable. But I am also convinced that we can find ways to reassure industries that they will not be put at a competitive disadvantage.
I will be urging the European Council to press on and to keep up with the timetable being followed by Parliament and being maintained so effectively by the French presidency – I welcome the remarks made just now by the President-in-Office of the Council. Yesterday Parliament took an important procedural step forward. Of course we are only at the beginning here of the interinstitutional negotiations. The Commission is ready to engage constructively in order to arrive at an agreement meeting with the largest possible support both in the Council and in Parliament’s plenary.
Finally, the Lisbon Treaty. Now is not the time to prejudge the precise way forward. But it is a time to recall that the last few weeks and months have shown again how Europe needs the Lisbon Treaty. Honestly, can we, in the future, deal with crises like the one we have witnessed between Russia and Georgia with the President of the Council changing every six months? It is obvious that we need more stability. It is obvious that we need more coherence. It is obvious that we need more efficiency in the decision-making process of Europe. We need a more effective Europe, a more democratic Europe, a Europe with a clear voice on the international stage. That is why I think we should keep our commitment to the Lisbon Treaty ratification.
These are not ordinary times. These are unprecedented times, which require all of us – Commission, Council and Parliament – to rise to the occasion. Together we must call and work for a European response to the financial crisis. We owe it to our citizens.
Addressing this crisis is an important test for the financial sector, for the Member States, for Europe and its institutions and for the international financial institutions. There is a wide variety of players involved – banks and other financial institutions, supervisors, the ECB and other central banks, the national governments, the Commission – so we need coordination. And events are moving very quickly – so we need speed.
Last week I called for a coordinated European response, because I am convinced that, without it, it will be much harder for Europe to overcome this crisis. Today I am encouraged by the determination of Member States to work together, as demonstrated by the statement of the 27 leaders of the Member States and myself on Monday, the Eurogroup and the Ecofin meetings. But I am not yet satisfied – we can and we must do more.
In particular I urge Member States to make a real effort at coordination – to improve cooperation amongst themselves and with European institutions. Yes, public intervention has taken place – largely at national level because this is where the money and competences are. This reflects the fact that we are a union of states, not one single state, with situations different at least to a certain degree. Member States’ actions have in most cases been effective. But Member States need to act on the basis of common principles and within a commonly agreed framework and to take into account the cross-border effects of their actions.
I take this opportunity to welcome the measures announced today by the United Kingdom, which are in line with the set of principles agreed yesterday at Ecofin.
Of course, there are also many things that we are doing and we still need to do at the level of the European institutions, both in the short and in the medium to longer term. The proposals I have in mind are concrete, practical and realistic.
Let me be clear: tempting as it may be, this is not the time or the place for political posturing and grandstanding, for announcing grand initiatives that have no chance of being followed through. Markets would penalise this sort of behaviour immediately and the costs will be borne by economic operators and mainly by taxpayers. This is the time for ambition combined with realism and responsibility."@en1
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