21 April 2009

ECON meeting 21 April

Papademos said he supported the Commission's proposal for 5 per cent retention rate for securitisation products. A higher level would probably not bring greater alignment of incentives, he said.

The ECB welcomes the proposals in the de Larosière report for the creation of a European Systemic Risk Council (ESRC) under ECB auspices, Papademos said in his speech. It would need to have well defined, close links with banking supervisory authorities, especially to ensure it had access to information about financial institutions and their "inter-connectedness", Papademo said. There would also need to be "adequate institutional mechanisms" to ensure its warnings and recommendations were acted upon. 

 

The next steps towards the implementation of the de Larosière Group proposals will require a number of legal, institutional and organisational issues to be addressed, he said. The foundations of a new system of macro-prudential supervision will be laid out in a forthcoming Commission communication and the decision of the European Council in June.

 

Responding to Pervenche Berès (PES, FR), Mr Papademos said he favoured the use of EU Treaty Article 105 (6) for the creation of the new ESRC. The core to ensuring its warning were acted upon was a "good and effective interplay with micro-supervisors and with governments via the Council", he said. 

 

The ESRC would include all the EU's central bank governors, Papademos said answering to Margarita Starkevičiūtė (ALDE, LT). Also, it would not be focused purely on the euro area, he added.

 

Asked about the retention rate for securitisation by Ieke van den Burg (PES, NL), Papademos said he supported the Commission's proposal for loan originators to be obliged to retain 5 per cent of the value of such loans on their own books as a way of ensuring they have an interest in the quality of the loan. A higher level of retention would probably not bring greater alignment of incentives given the limitations he saw in this approach's effectiveness.

 

Full speech

ECON press release

 

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