27 September 2007

Speech McCreevy: Current issues in the EU banking sector

Speaking at a dinner with EBF Board Members in Brussels, Commissioner McCreevy outlined the first lessons  from the sub-prime crisis. “The whole episode reinforces the need for greater international cooperation among regulators – EU-US and wider”, he said and announced that the ECOFIN Council in November will adopt an initial work programme setting measures that need to be examined in the light of recent market turmoil.

The Commissioner will address the issues to be investigated in more detail in October. These include:

- improving transparency for investors, markets and regulators,

- better data, and

- clarifying the role of credit rating agencies in structured finance markets and their governance in general.

“The real problem, as I see it, is that until now we have organised supervision in Europe along national lines”, McCreevy said and underlined the need to agree on fundamental political principles. Currently, the supervisory arrangements have not kept up with the pace of cross-frontier penetration of large financial institutions, he argued and calls the supervisory arrangements to reflect market realities better.

“A key, but very difficult aspect, relates to who pays?”, he noted and announced that the conclusions to be adopted by the Ecofin Council on 9 October will help.

He also noted that the December ECOFIN Council will take stock of the review of the Lamfalussy process. “I expect that in 2008 we will continue a thorough discussion on the future of the regulatory approach.”

“We believe, first of all, that this Level requires a strong political endorsement in order to enable adoption of pan-European supervisory standards and their effective implementation in the Member States”, he said.

“We will therefore encourage the Member States to provide their supervisory authorities with appropriate mandates to allow their effective work in CESR, CEBS and CEIOPS. And last, but not least, we will indicate the measures aimed at strengthening the position of the Level 3 Committees plus enhancing their decision making capacities.”

Full speech

© Graham Bishop