Finance Ministers focused primarily on preparations for the spring European Council on 13 and 14 March and the current situation on the financial markets. Issues of financial stability are among ECOFIN’s priorities in future months”, Andrej Bajuk, ECOFIN President, stressed.
Main results of the Council
The Council approved a report on financial stability issues, in the light of recent volatility on financial markets, as well as this year's update of the EU's broad economic policy guidelines and country-specific recommendations on economic and employment policies.
Both documents will be submitted to the spring meeting of the European Council, to be held in Brussels on 13 and 14 March, where the issue of sovereign wealth funds will also be discussed.
The Council assessed a second series of updated stability and convergence programmes presented by the member states (following 11 programmes assessed in February).
It also adopted a regulation updating rules on aviation security adopted in 2002.
Financial stability
The Council approved an interim report on the subject, to be submitted to the European Council, assessing ongoing work on financial market stability in the light of the sustained period of volatility on global financial markets experienced since last August (6784/08).
It also took note of the presentation by the Commission of a communication, suggesting that the European Council endorses principles to guide the EU, both internally and in international fora, as well as a series of actions to be followed.
In the interim report to the European Council, the ECOFIN Ministers pointed out that conditions in the international financial system remain unstable. Although substantial adjustments have already taken place, further write-offs can be expected for the final quarter of 2007. Despite the credit crunch, however, the volume of loans available to the corporate sector has not been affected.
The prudential framework and the risk management in individual institutions need improvement. The Informal ECOFIN Meeting in Ljubljana on 4 and 5 April will address a number of specific issues as a follow-up review of the financial shake-up with the aim of preventing the recurrence of such a phenomenon in future.
Sovereign wealth funds
The Council took note of the presentation by the Commission of a communication, suggesting that a code of conduct be defined at international level in order to ensure greater transparency, predictability and accountability in sovereign wealth funds; a code that would involve the countries that invest in such funds (6944/08).
Delegations agreed that sovereign wealth funds play an important and positive role on global capital markets. However, the recent increase in funds under their management raises issues of governance and transparency that need to be addressed so as to ensure that the climate for investment remains open, secure and predictable.
Delegations agreed on the need for the EU to forge a common position, so as to help ensure that their shared objectives are met through the work of international fora. Commitments in particular with regard to the separation of the management of sovereign wealth funds from political authorities should be central to any agreement at global level. And if international negotiations were not to develop satisfactorily, further action should be considered at EU level.
Taxation
In the area of value added tax, the Ministers discussed measures to combat tax fraud, but it was not possible to reach agreement on conclusions. The great majority of States support the priority given to conventional measures, while two States insist on introducing a pilot project on reverse tax liability as a measure against tax fraud. The Slovenian Presidency will endeavour to put measures to combat tax fraud on the agenda at the next ECOFIN meeting during its Presidency period
Main results of the Council
Commission Communication on Europe's financial system - adapting to change
Financial Market Stability - Interim report by the ECOFIN to the European Council
Commission Communication on Sovereign Wealth Funds
© Graham Bishop
Comments:
No Comments for this Article