Ministers discussed the co-ordinated EU response to the economic slowdown, and aspects on financial stability and financial supervision. ECOFIN also examined the remuneration of company managers, but could not find agreement on the Solvency II Directive.
The ECOFIN Council adopted conclusions on the immediate responses to take to the financial crisis. We have agreed to support systemic financial institutions, ECOFIN concluded. We all commit to take all necessary measures to enhance the soundness and stability of our banking system and to protect the deposits of individual savers.
Member states also agreed to co-ordinate actions and to take into consideration potential cross-border effects of national decisions.
ECOFIN also underlined the necessity of avoiding any distortion of treatment between US and European banks due to differences in accounting rules, taking note of the flexibility in the application of mark to market valuation under IFRS as outlined in recent guidance from the IASB.
ECOFIN strongly recommends that supervisors and auditors in the EU apply the new IASB guidance which outlines the flexibility in the application of mark to market valuation under IFRS. Also, IASB and the FASB should work together on the issue of asset reclassification to find a solution by the end of the month, and with the objective to implement them as of the third quarter.
With regard to the national deposit guarantee schemes, ECOFIN agreed that all Member States would, for an initial period of at least one year, provide deposit guarantee protection for individuals for an amount of at least 50 000 euros, acknowledging that many Member States determine to raise their minimum to 100 000 euros. The Commission will bring forward an appropriate proposal to promote convergence of deposit guarantee schemes.
Coordinated EU response to the economic slowdown
The economic situation calls for a co-ordinated response at the EU level, based on a common understanding of the problems at hand, with some common features and also national specificities, the ECOFIN Council states.
Key is to design policies which help curb the inflation, protect the purchasing power of people, foster sustainable growth and help restoring an environment supportive to monetary policy. The full implementation of the Ecofin roadmap is key to restore confidence on financial markets.
By the end of the year, ECOFIN expects proposals for a revision of the prudential framework for securitisation under the CRD. On asset valuation, revised standards are urgently awaited from the IASB. Finally, Basel II remains a relevant framework to improve risk management. In implementing the new framework, banking supervisors will monitor the potential pro-cyclical effects of the new regulation and assess whether remedial measures are needed, ECOFIN notes.
Financial stability and financial supervision
The Council agreed on the need to continue pursuing a co-ordinated response at the European level. However, these should take place within the scope of Member States' respective responsibilities, coupled with Member States' flexibility to adjust their response to their individual situation, and to continue to implement sound structural reforms at the national level to strengthen resilience to future shocks.
To enhance the effectiveness of supervision of the financial sector in Europe more convergence and harmonisation in the implementation of rules and a strengthening of supervision of cross-border groups is required, ECOFIN states.
Regarding supervision of financial groups, the Council emphasizes the need for a more efficient system of European supervision of cross-border groups."
Executive pay
National authorities have a role to play in helping to define an appropriate regulatory framework and in encouraging good practices and voluntary self regulation, for example through principles of good governance, transparency and disclosure rules, and control rights by shareholders, ECOFIN states.
Performance should be properly and comprehensibly reflected in executives' pay, including leaving pay, which should be appropriately linked to the contribution of the executive to the company's success. Also, performance criteria should provide the right incentives, and potential conflicts of interest for executives conducting mergers and acquisitions should be prevented.
Press release
ECOFIN results (French)
ECOFIN results (English)
Immediate responses to financial turmoil
Council Conclusions on a coordinated EU response to the economic slowdown
Council Conclusions on executive pay
Council Conclusions on financial stability and financial supervision
Council Conclusions on Fight against tax fraud
© Council of the European Union
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