07 June 2012

Commissioner Barnier: Financial regulation, fiscal consolidation, governance, growth - Europe is taking up its challenges

"Our goal remains unchanged: no financial player, no financial product and no financial market should escape effective supervision. To achieve this, we have taken a number of measures:

First of all, we have set up three new pan-European supervisory authorities...

Second, we are increasing capital requirements for banks, in compliance with the Basel III agreement...

Third, we now have rules for previously unregulated players, such as hedge funds and credit rating agencies...

Fourth, we are improving financial markets' effectiveness, integrity and transparency. We have adopted rules on short-selling, credit default swaps and OTC derivatives...

And finally, we yesterday proposed a European framework for bank resolution. The new framework will ensure that supervisory authorities have all the necessary tools to resolve a bank in a structured way. It will also contain rules on resolution financing, with the obligation for national systems to lend to each other. It will limit the impact on tax-payers, and ensure that shareholders and bondholders are the first to take losses.

Let me now mention our three priorities for the remainder of the year.

Shadow banking: According to the Financial Stability Board, non-banking credit activities amounted to €46 trillion in 2010. This represents between 25 and 30 per cent of the total financial system. Let me be clear: Non-banks are important sources of credit intermediation and alternative financing. The aim is not to prevent this kind of activities. But we must ensure that the new financial regulation does not push certain banking activities towards the non-regulated sector. Our ongoing public consultation may lead to legislative proposals later this year.

Structural reforms of banks: Regulation of shadow banking, stronger capital requirements and a framework for bank resolution are key tools to ensure stability. But we don't want this stability to be jeopardised by structural problems in banks. Interesting work has been launched at national level, such as the Vickers Report in the United Kingdom or the Volcker Rule in the United States. But in a truly integrated single market, we need to work these things out together. That's why I have set up an independent High-level Expert Group headed by Erkki Liikanen, Governor of the central bank of Finland. The Group will present its recommendation in the autumn.

Enhance consumer and investor protection: through a number of proposals targeting retail investments and insurance brokers.

There have been recent calls for even more integration of the EU banking sector, notably in the eurozone. Ideas will be presented to the European Council by President Barroso and President Van Rompuy at the end of this month. This is very important. But the Banking Union is not a new piece of legislation; it is a concept. It should not make us forget the already concluded and ongoing reforms.

I have already mentioned some of them: European supervision, more and better bank capital, bank resolution. And the Commission made a proposal for more integration between national deposit guarantee schemes already two years ago. All these measures are fundamental cornerstones of a Banking Union. Some of them are already in place. Others should be adopted shortly. And in all these areas, we keep the door open for even more integration at the European level in the future."

Press release

© European Commission