The two Presidents call on the G20 to reaffirm its commitment to reform financial markets and they stressed that there is a need to focus on and regulate OTC derivatives market. Moreover, the cumulative impact and macroeconomic effect of financial reforms should be taken into account.
The President of the European Commission, José Manuel Barroso, and the President of the European Council, Herman Van Rompuy, have sent a joint letter to the other leaders of the G20 to present their thoughts on the key issues on the agenda of the G20 summit in Toronto from 26-27 June. The EU is a full member of the G20 and the G8.
President José Manuel Barroso outlined the Commission's priorities for the G20 Summit on 13 May 2010 in a letter to the European Council. The European Council discussed EU preparations of the G20 summit on 17 June and adopted the EU's position for the Summit. On this basis, Presidents Van Rompuy and Barroso have transmitted a letter to the other G20 leaders on the key issues for the EU on the G20 agenda.
The two Presidents stress that securing strong and sustainable growth remains the overriding priority and underline: “Given the major risks that late exit from extraordinary fiscal stimulus would entail for public accounts’ sustainability, at the Toronto summit, the G20 should agree on a coordinated and differentiated exit strategy to ensure sustainable public finances.” Furthermore, they call for substantial consolidation starting at the latest in 2011 coupled with structural reforms to foster growth. After explaining the European determination to ensure fiscal sustainability in a growth-friendly way, they express their expectation that all major economies to do their part to achieve the agreed objective of strong, sustainable and balanced growth. In this context they also “welcome China’s decision to proceed further with the reform of the RMB exchange rate regime and to resume the RMB exchange rate flexibility.”
The two Presidents call on the G20 to reaffirm its commitment to reform financial markets and illustrate how the European Union has now put in place a comprehensive reform agenda to fulfil the G20 commitments. They also inform about the EU’s intention to disclose the results of the ongoing stress tests by the European banking supervisors at the latest in the second half of July. They welcome the significant progress made in implementing the G20 commitments on better quality additional capital and new liquidity requirements, underlining that the objective to achieve international agreement on this issue before 2010 is well on track: “Special attention should be given to the calibration and phasing in of the related measure taking into account the cumulative impact and macroeconomic effect of financial reforms.”
They also insist that “we must strive for a strengthened crisis management framework at a global level including effective resolution tools, financing arrangements and cross-border coordination” and express the EU’s deep commitment to put in place such measures.
The letter also stresses the importance of uniform implementation of the strict compensation standards agreed last year. On OTC Derivatives, legislative proposals for the EU are announced for September. On accounting standards, they recall the need to achieve global convergence on a set of high quality standards within the deadline agreed at Pittsburgh and the need to further improve the governance of International Accounting Standards Board. Further progress on improved corporate governance in financial institutions and rigorous enforcement of financial regulations including rules on market abuse are called for as well as continued efforts on dealing with Non-Cooperative Jurisdictions, including public listing of incompliant jurisdictions by the end of 2010 and, if necessary, application of counter measures.
President Barroso and President Van Rompuy also refer to the agreement at European level that Member States should introduce systems of levies or taxes on financial institutions, to ensure fair burden sharing and set incentives to contain systemic risk, as part of a credible crisis resolution framework. “We consider that international work on levies and taxes on financial institutions should continue to maintain a world-wide level playing field. Also the introduction of a global financial transaction tax should be explored and developed further in that context.”
They call for the completion of the reform of the International Monetary Fund as a single and comprehensive package by November 2010 and highlight the European Union’s determination to support the achievement of the Millennium Development Goals globally by 2015 and to achieve its development aid targets.
© European Commission
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