ECOFIN background note on exit strategies and support measures to the financial sector
11 November 2009
ECOFIN ministers will discuss the methods and timing of the phasing out of bank guarantee schemes. Retaining state aid measures longer than necessary could lead to artificially maintaining banking activities that would not otherwise be profitable.
Exit strategies - support measures to the financial sector
Following on from its breakfast discussion of fiscal measures, the Council, will hold an exchange of views on crisis policy exit strategy as regards measures taken by member states to support the financial sector.
The discussion will focus on methods and timing for the phasing out of bank guarantee schemes, with a view to facilitating further work by the Economic and Financial Committee on principles and a tentative timeframe for the coordinated withdrawal of support measures.
The banking sector benefited extensively from government measures in response to the financial crisis, such as recapitalisation, guarantees on debt issuance and, to a lesser extent, relief schemes for impaired assets. Retaining such measures longer than necessary could lead to artificially maintaining banking activities that would not otherwise be profitable, and increase the risk of competitive distortions and inappropriate risk behaviour.
Follow-up to the October European Council
The presidency will inform the Council of its intentions regarding the follow-up to the EuropeanCouncil meeting on 29 and 30 October, as regards:
· the financing of climate measures;
· crisis policy exit strategy;
· the review of the Lisbon strategy for jobs and growth;
· the reform of financial supervision;
· financial stability arrangements;
· coordination for International Monetary Fund and G20 meetings.
Follow-up to the November G20 finance ministers meeting
The Council will discuss the follow-up to the meeting of G20 finance ministers and central bank governors held in St Andrews (United Kingdom) on 6 and 7 November, on the basis of a report by the UK delegation in its capacity as G20 presidency.
Issues discussed at St Andrews include crisis policy exit strategies, the G20 framework for sustainable and balanced growth and the financing of climate policies.
