08 July 2008

ECOFIN meeting 7-8 July

The Council shares the Commission view that the current initiatives on CRAs do not fully address the challenges posed, that further steps are needed and that regulatory changes might be necessary.

The ministers adopted conclusions on the situation of the financial markets and the implementation of the Council's roadmap on financial stability. These conclusions focus mainly on ratings agencies and the transparency of financial markets, but also touched on the reform of the IASB.

 

Credit Rating Agencies

The Council fully supports the FSF recommendations, in particular differentiated ratings and better information on the risk characteristics of the structured products.

 

The Council shares the Commission view that the current initiatives do not fully address the challenges posed, that further steps, are needed and that regulatory changes might be necessary.

 

The Council supports the objective of introducing a strengthened oversight regime for rating agencies. The Council supports an enhanced European approach and the objective of strengthening international cooperation to ensure a stringent implementation of internationally approved principles. To this end, and without prejudice to consideration of its practical application, the Council supports the principle envisaged by the Commission that the rating agencies should be subject to an EU registration system.

 

Transparency

The Council calls on international standard setters to take into consideration CEBS' report on issues regarding valuation of complex and illiquid financial instruments in their work programmes. A CEBS review of its recommendations on banks’ disclosure is expected for 2009 within the scope of pillar III of the Capital Requirements Directive and of its recommendations on valuation and accounting.

 

The Council also welcomes the initiatives undertaken by the industry to improve transparency for investors, markets and regulators of securitized markets. The Commission will closely monitor the implementation of these initiatives and to report back to the EFC and the Ecofin in early September.

 

IASB Governance

The Council developed some key principles along which the further reform of the IASCF and IASB's governance and public accountability should be made.

Among others, the Council underlines that the IASB must achieve greater transparency and legitimacy of its standard-setting and agenda setting processes, in particular through more systematic public consultations about the IASB's work programme, including the IASB-FASB convergence agenda and more field testing.

 

The Council also welcomes efforts to enhance the role of EFRAG, especially in relation to timely upstream input to the IASB's agenda-setting process.

 

Main Conclusions

Council Conclusions on IASB Governance

Council Conclusions on Transparency and Rating agencies:

Background note

 

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