09 October 2007

ECOFIN meeting

Key items for Financial Services

Better Regulation 

Ecofin will consider the specific issue of statistical burdens in November on the basis of the report by the Commission. It will consider the further progress made on all aspects of better regulation in early 2008 ahead of the Spring European Council, drawing upon the Strategic Review of Better Regulation which will include an overview of the adopted and planned reduction measures."

Council Conclusions on Better Regulation

Flexicurity

Economic aspects

Council conclusions on Flexicurity

Clearing and Settlement

The Council adopted the following conclusions: (excerpt)

In respect of TARGET2-Securities, the Council:

- WELCOMES the fact that the ECB is proceeding along the lines of the Council conclusions of February 2007 and conducting a public consultation process on the general principles, nature and scope of TARGET2-Securities. Further decisions on the development phase can be expected in spring 2008 and ECOFIN Ministers will be kept informed before any further decisions are taken.

Concerning the removal of legal and fiscal barriers identified in the “Giovannini Report”, the Council:

- AGREES that their removal is a key priority and considers that concrete actions and a timeframe should be proposed promptly by the Commission on the basis of the work of the advisory groups taking into account the views and responsibilities of the Member States; and the Financial Services Committee is INVITED to provide guidance to ensure progress and to monitor development.

As to the work on ESCB/CESR “Standards for Securities Clearing and Settlement in the EU”, the Council:

- RECOGNISES that the investor protection and prudential safety of the post-trading sector, including its risk-management aspects, are important issues to be discussed and that concrete action, including for example by agreeing on the standards or regulatory measures, should be considered as a complement for the Code of Conduct on risks and financial stability.

- REQUIRES the FSC to deepen its work on the scope, legal basis and contents of the standards giving due consideration to the importance of ensuring a level playing field; and together with the Commission propose ways forward on this subject to be submitted to the Council in early spring 2008.

Council Conclusions on clearing and settlement

EU arrangements for Financial Stability

The Council adopted the following conclusions: (excerpt)

AGREES on common principles that will be the basis for co-operation among national authorities in preserving financial stability within the EU. These principles should be respected in the management of any cross-border financial crisis with potential systemic implications. They constitute a consistent and sound basis for responding to any financial crisis situations in the EU, specifying the overarching considerations for cross-border cooperation, taking into account that quick actions may be needed to safeguard financial stability.

INVITES the Economic and Financial Committee to prepare for spring 2008, an extended Memorandum of Understanding. The new MoU will include:

- the common principles;

- a common analytical framework for the assessment of systemic implications of a potential crisis to ensure the use of common terminology in assessing the systemic implications of a cross-border financial crisis by all relevant authorities; and to enhance the availability of timely assessments among authorities that will facilitate the decision-making in a crisis situation. The EU Central Banks, Supervisory Authorities and Finance Ministries are INVITED to use this framework by the end of 2008; and

- common practical guidelines for crisis management to reflect a common understanding of the steps and procedures that need to be taken in a cross-border crisis situation.

ENCOURAGES authorities in different Member States that share financial stability concerns to start developing, as soon as possible, voluntary cooperation agreements consistent with the extended EU wide MoU and building on cross-border supervisory arrangements for crisis prevention. These agreements would focus on the principles and procedures in detail - taking into account particular needs of crisis management in a specific cross-border context.

To facilitate the conclusion of these agreements, the Council INVITES the Economic and Financial Committee to develop concrete examples by spring 2008.

The Commission is INVITED to examine possible enhancements, and where necessary propose regulatory changes as follows to:

- clarify the nature and extent of the legal obligations for Supervisory Authorities Central Banks and Finance Ministries to exchange information and to cooperate and in this context: increase information rights and involvement of host countries; clarify the role of consolidating supervisors and facilitate the timely involvement of relevant parties in a crisis situation; and consider including in the mandates of national supervisors, a task to cooperate within the EU and to take into account the financial stability concerns in all Member States;

- analyse the feasibility of reducing barriers to cross-border transfer of assets while defining appropriate safeguards for entities transferring the assets; and analyse the feasibility of revising rules for the winding-up of banking groups to include joint insolvency proceedings for cross-border groups while providing sufficient safeguards to all stakeholders of the group or its part being reorganised or wound-up; and

- improve interoperability of Deposit Guarantee Schemes (DGS), by removing the inconveniences in the current arrangements, and clarify the practical implications of DGS to absorb and share any financial burdens.

Council Conclusions on enhancing the arrangements for financial stability

Agenda

Background Document

Full Press release

© Graham Bishop