EXCHANGE OF VIEWS with Mr. Jean-Claude JUNCKER, President of the Eurogroup
Mr Juncker told MEPs of his concerns at rising inflation. He also warned against adopting a stance of "benign neglect" in the face of rapid changes in currency markets. Referring to the sub-prime market turmoil Mr Juncker noted that this is not over yet and its consequences might become more serious in 2008 rather than this year.
Discussion in Parliament centred on these issues, particularly with regard to supervision and crises management and prevention. Mr Goebbels (PES/LUX) questions the role of the ECB as it provides liquidity (PES/NL) to the market more generously without looking at the passport. Mrs van den Burg referred to the increasing role of supervisory convergence in Europe. Mrs Beres (PES/F) finally reminded on the linkage between monetary policy and financial markets, asking for an increased role of the Central Bank as a European Supervisor.
Mr Juncker warned not to mix up the supervisory role of the ECB and its monetary role. However, he noted that the answer to supervision in Europe will differ form that before the sub-prime market developments.
Other issues referred to the lack of action taken by the European Commission. Mr Langen (EPP/D) asked what can be done with regard to crises prevention, bearing in mind former crises scenarios in Mexico, Southeast Asia and elsewhere. Mr Radwan (EPP/D) complained about the Commission’s lack of attention towards the role of Rating Agencies and the Hedge Fund industry.
Another main topic discussed dealt with the US Dollar exchange rate and the increasing economic role of China.
Mr Juncker made MEPs aware of the change in the tone with regard to the Euro-US Dollar exchange rate as recent statements made by the US finance ministry show a real interest in a strong dollar that is in the interest of the US economy. He finally announced his forthcoming visit to China, together with Commissioners Almunia and McCreevy at the end of this week.
Mr Klinz (LIBE/D) questioned whether latest developments in Germany and France are signs of lacking reform willingness in these countries. He noted that the high Euro-Dollar exchange rate may cause problems to the growth perspective of Europe.
15.00 – 16.30
EXCHANGE OF VIEWS with Mr. Joaquín ALMUNIA, Commissioner for Economic and Monetary Affairs
Commissioner Almunia presented the Commissions autumn economic forecasts for the period 2007-2009 showing growth deceleration from 2.9 % in 2007 to 2.4 % in the EU, and from 2.6 % to 2.2 % in the euro zone. He warned the committee of risks regarding growth and inflation for the year ahead. These figures are based on current market information, Almunia underlined. A further decline may be expected if markets deteriorate further.
The main downside risks contribute to a possible sharper than expected economic slowdown in the US and the recent financial markets turbulences. A third factor is related to rising inflation expectations, resulting from further oil prices increases and rises in food and commodity prices.
Part of the discussion centred on a possible European response to these developments and in how far this could be reflected in the Lisbon strategy.
MEPs also asked about the role of sovereign funds. Commissioner Almunia underlined the important role of these funds stating that these “are high on the agenda”. Almunia reiterated the free access to these funds but also called for “European principles”. “The Commission will discuss and set out these European principles on sovereign funds in the near future”, he said.
17:00
Green paper on market-based instruments for environment and related policy purposes
Draftsman: John Purvis (EPP-ED)
Responsible: ENVI* – Anne Ferreira (PSE)
Consideration of draft opinion
Introducing the draft opinion rapporteur John Purvis (EPP/UK) criticised that the Commission Green Paper mentions mainly tax incentives as market based instruments. Mr Purvis regards that the Emission Trading Scheme (ETS) as the most cost-efficient, demand-sensitive market-based instrument available.
More generally, as this issue deals with originally economic issues, Mr Purvis complained that ECON Committee was not nominated as the responsible Committee.
Mr Rapkay (PED/D) agreed with the rapporteur that ETS is an important market based instrument, although not the only instrument available. Energy taxation should be relevant part of the draft opinion as it can be used as a measure to internalize external effect. Also, the use of subsidies should be considered, as well as tax reductions on certain forms of investments (eg. housing renovation).
Summarizing the available instruments and its functioning the Commission outlined that ETS serves to set a cap while the market sets the price, while tax incentives sets the price while the market sets the cap.
Closing the discussion Mr Purvis underlined that ETS serves best to reach the agreed 2020 target. The use of subsidies is problematic as this might immediately become subject of discussions on state aid etc.
Timetable:
Deadline for amendments: 26 November
Discussion in Committee: 18 December
Vote in Committee: 19 December
Draft Opinion
Commission Green Paper
21 November 2007
Vote:
10:00
Asset management II
Rapporteur: Wolf Klinz (ALDE)
Adoption of draft report
The Committee adopted the report subject to a number of compromise amendments. The consolidated text will be published soon.
11.00 – 12.30
Joint Hearing on the Green Paper on Retail Financial Services in the Single Market and the Sector Inquiry on retail banking
Opening the hearing Rapporteur for the ECON Committee Othmar Karas (EPP/AUT) referred to the deep relation between SEPA, the sector inquiry and the Green Book. He demanded the industry to come up with constructive proposals on measures to achieve a single European retail market instead of defending their status quo.
Rapporteur Gianni Pitella (PSE/ITA) posed three questions concerning the main problems, particularly the problems linked to consumers’ mobility in the retail market, the banking industry initiatives that can help in this perspective, and what would happen if the interchange mechanism was not to exist anymore.
Graham Watts, Eurocommerce, complained about the lack of transparency and the lack of competition between banks with regard to payment cards. The cards market has not yet reached full potential. The sector inquiry should act as a benchmark.
MIF acts as a price fixing mechanism and is anticompetitive which leads to higher prices, he said.
Finally he said that to his view self regulation is not sufficient for a functioning market.
Michaela Koeller, CEA, noted that for the insurance sector there are too many provisions that are not transparent. overload of information is never useful for the consumer. We are glad the Commission is undertaking a cross- sector study on reaction of consumers to information provided. We look forward for the results of the study, to be published in 2008.
Mrs Koeller warned about the Commission’s intention not to renew the insurance Block Exemption Regulation on grounds of formal principles in 2010. “The Commission should avoid any unnecessary measures which will further contribute to fragmenting the EU retail insurance market. CEA has demonstrated that the BER fosters cross-border competition, promotes consumers’ mobility, diversity and comparability of products as well as insurability. Not renewing the BER would endanger all these tangible benefits!” warned Michaela Koller.
Andreas Pangl, Raiffeisen Banking Group, questioned the need for a European retail market due to the low interest of consumers. A further harmonisation should reflect consumers / users needs. Also, there is a need for a cost-benefit analysis to avoid bureaucratism and overregulation.
He also warned that small regional banks should not be endangered and called for multiple business models.
Guido Ravoet, EBF, noted that the current development is more a supply driven than a demand driven market. The current fragmentation of the retail banking market in 27 countries is linked to a low level of competition and low harmonization rules.
We believe a mutual recognition of not key elements and full harmonisation of key elements will be the right approach in any piece of such legislation (CCD is an example).
Bob Schmitz, Union Luxembourgeoise des Consommateurs, was rather scepical about the benefits for consumers of further harmonization and calls to draw lessons from the Consumer Credit Directive.
Due to the rising numbers of consumers in financial difficulties the duty to advice of the relevant financial institution is much more important than the quantity of information provided to the consumer.
Opening the discussion Mr Sanchez-Presedo (PSE, ESP) asked what consumer organisations can do in this respect.
Pia-Noora Kauppi (EPP/FIN) requested more information about the cost calculations and on consumer education.
Mrs Starkeviciute (ALDE/Lit) was particularly interested in the way forward on the interchange fee.
Finally, Mr Klinz (ALDE/D) asked if the demand of cross border is really not existent as Mr Prangl said. Evidence from Luxembourg and Switzerland shows a different picture.
In the retail insurance sector, consumers tend to go to local providers and you need to be local for this kind of products, Mrs Koeller answered.
Bob Schmitz reiterated the role of quality of information that should centre on the relevant information.
As to MIF Mr Watts stated the Sector Inquiry found there isn’t enough competition in the retail banking market. The conclusions on interchange the Commission comes up with are clear and objective, as coming from an impartial and independent study.
A representative from ECOSOC reminded to several legal obstacles resulting e.g. from the Money Laundering Directive and the physical identification of a person in case of an opening of a bank account.
Mrs Beres finally concluded that many issues are still open and could not be discussed in the meeting. These will have to be dealt with on a future occasion.
Timetable:
Presentation of the Sectorial Enquiry and the Green Paper on Retail Financial Service: 29 January 2008
Discussion of Amendment: 26 of February in ECON
ECON vote: 25 March 2008
EP Plenary vote: May 2008
© Graham Bishop