05 September 2007

MEPs look for lessons from turbulence on world's money markets

The European Parliament debated Europe's response to to the recent mortgage credit crises in the US. 'The problem is not about bad lending in the housing market but about the effect on our bank system, about the use of banking loans in other parts of the world,' Peter Skinner said.

Creditrating Agencies “should have given more timely warnings about possible risks to the market,' Pervenche Berès, chair of the Monetary Affairs Committee said. 'The surveillance mechanism in place should be monitored and reviewed since rate agencies are themselves paid by the enterprises they have to rank.'

Mr Skinner wants more information and transparency about the financial markets, particularly better scrutiny of credit rating agencies' assessments. A more structured and continuous dialogue with US authorities could help in avoiding similar problems in the future, he said.

José Manuel Garcia Margallo sees the recent financial crisis as a good occasion to think about supervision and control at EU level. 'We have to look more closely at the effectiveness of those mechanisms...would they have been enough if a similar crisis had originated in the EU?' The control mechanism is based on coordination by national central banks. Would it be more efficient and effective 'if we had a mechanism at European level,' he said.

© Graham Bishop