Informal ECOFIN Meeting in Porto 14-15 September

15 September 2007

Ministers and Governors debated the economic situation and the current period of volatility and re-appraisal of risk in global financial markets, triggered by the difficulties in the US subprime mortgage market.

In a common statement Ministers and Governors noted that “financial innovation also raises obvious challenges to the regulatory and supervisory authorities. In this context, the Economic and Financial Committee (EFC) will review, alongside our international partners, how to further improve transparency of complex financial instruments, of institutions and vehicles, as well as how to improve valuation processes, risk management and liquidity stress testing. They will also consider the role of rating agencies in structured finance.”

Ministers and Governors discussed the financial stability arrangements in the EU as part of the objectives to obtain the full benefits from financial integration. The discussion focused on further steps in developing the arrangements for cross-border financial stability within the EU based on recommendations by the EFC.

The Ministers and Governors welcomed that the EU Member States have continued to progress in developing their national arrangements for financial stability and co operation between Supervisory Authorities, Central Banks and Finance Ministries.
Ministers and Governors agreed on further work priorities to be taken at the EU and national level. The main actions are as follows.

First, The Memorandum of Understanding (MoU) signed in 2005 between EU Banking Supervisory Authorities, Central Banks and Finance Ministries on co-operation and information exchange will be extended to include common principles in the field of financial stability, agreed today; a common analytical framework for the assessment of systemic implications of a potential crisis; and common practical guidelines.

Second, authorities in different Member States that share common interests regarding financial stability are encouraged to develop voluntary specific cooperation agreements.

Third, possible improvements will be examined to facilitate information exchange and cooperation among authorities and to enhance the tools that are necessary in preserving cross-border financial stability.

Formal adoption of the outcome of the meeting shall take place at the next Ecofin Council meeting in October.

Ministers and Governors reviewed the state of play of the ongoing initiatives to improve efficiency, integration and safety and soundness of post trading arrangements in Europe, reinforcing its significance in making a single European securities market a reality.

Some progress has already been achieved in certain key areas, namely by the implementation of the industry Code of Conduct on clearing and settlement signed in November 2006.

Ministers and Governors have also been informed on the developments with regard to the European Central Bank's initiative to set up TARGET2-Securities; the work on dismantling the fiscal and legal barriers to securities market integration (the Giovannini barriers); and also the efforts of the European System of Central Banks and the Committee of European Securities Regulators to promote the safety and soundness of European post trading arrangements.

Ministers welcomed the results already achieved but continued to stress the need for further substantial progress in this field to promote an efficient European market infrastructure for clearing and settlement of securities transactions.

Press release

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