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The global financial instability was mainly determined by unstable macro-economic policies in the major economies and currency areas of the world, with lax regulation of financial markets in general playing the role of a permissive factor, the report finds. To stabilise financial markets, the deployment of government money into insolvent banks should be accompanied by a straight takeover by the state, a restructuring phase and resale to private investors as soon as possible. A new to be established European Fund would issue Eurobonds and make the proceeds available to European institutions for their financial rescue operations.
There is no need to fundamentally change the regulatory architecture, the report states and underlines that there is no need to extend prudential regulation beyond the banking system. The report also calls for a drastic simplification of the regulatory structure in Europe. "It is high time that Level Three Committees be given legal powers in co-ordinating the implementation of EU directives" the authors say.
The Full document is attached below.