March 4 2009
By Clive Leviev-Sawyer
The European Commission wants Europe to set up a sanctions regime for banks and bankers that flout industry rules, according to plans to be published on March 4 2009, AFP reported.
The proposal is part of plans for a major shake-up of European supervision of the financial sector based on recent recommendations from an expert panel headed by former IMF director Jacques de Larosiere.
In a media statement on March 4, the EC said that it was calling on EU leaders to further step up co-ordinated European action to fight the economic crisis.
In its communication to the European Council summit on March 19 and 20, the Commission sets out proposals for building on the extensive support already being given to the real economy and to employment.
The Commission’s communication unveils a comprehensive reform of the financial system based on the de Larosiere report.
“It shows how a clear and united commitment to this ambitious programme can pave the way for the EU to give a global lead at the G20 summit in London on April 2,” the EC said.
EC President Jose Manuel Barroso said: “The Spring European Council must send a strong signal to citizens, businesses and the world. Yes, there is a way out of this crisis. Yes, Europe has the unity, the confidence and the determination to win this battle. We must forcefully implement the agreed recovery plan in a coordinated way. We must use the single market to the full.
“Today we are asking EU leaders to agree on a comprehensive action plan. To do everything possible to protect our citizens from unemployment. To clean up financial markets on the basis of the de Larosiere Report. And to pave the way for Europe to lead by example and by persuasion as we approach the G20 summit in London,” Barroso said.
The Commission’s communication begins with an overview of the measures taken since autumn 2008 which have prevented the meltdown of the European banking industry and thus prevented countless bankruptcies and job losses.
It urges member states to act quickly to restore confidence and get bank lending flowing again, in particular by implementing the guidance the Commission issued on February 25 2009 on removing impaired assets from banks’ balance sheets.
“The Commission endorses – and asks EU leaders to endorse – the key principles set out by the de Larosiere Group,” the EC statement said.
The Commission calls for a supervisory system combining much stronger oversight at EU level with maintaining a clear role for national supervisors.
It backs the Group’s proposal to set up an early warning body under ECB auspices to identify and tackle systemic risks.
The Commission supports the Group’s recommendation for a core set of regulatory standards throughout the EU.
In April, the EC will bring forward initiatives already in the pipeline on hedge funds, private equity and remuneration structures.
Following an impact assessment, the Commission will put forward to the June European Council a detailed timetable for further measures based on the de Larosiere report.
It will bring forward proposals in the autumn on the new supervisory framework and on issues including: liquidity risk and excessive leverage; further reinforcing protection for depositors and policy holders; and effective sanctions against wrongdoing.
The communication points to good first results of the European Economic Recovery Plan. The overall fiscal support to the economy from European and national measures and from automatic stabilisers amounts to at least 3.3 per cent of GDP over the 2009-2010 period.
An annexe summarises 500 national measures and concludes that they are broadly in line with the principles that recovery action should be timely, targeted and temporary.
The Commission calls on EU leaders to endorse clear principles for further action, in line with the single market, with open trade worldwide, with building a low carbon economy and with returning to sustainable public finances as soon as possible.
The Commission repeats its call for Member States to agree on the targeted investment of five billion euro in energy interconnections and broadband.
The Commission’s contribution calls for member states to step up efforts to tackle unemployment – which could approach 10 per cent in 2010 for the first time since the 1990s – and social exclusion.
“These efforts will also help maintain demand and prevent further job losses.” They should be a central plank of national stimulus plans, the EC said.
The Commission invites member states to use measures such as financial support for temporary working-time arrangements, boosting income support for unemployed people, lowering non-wage costs for employers and boosting investment in skills and retraining.
At European level, the EC calls for rapid approval of its proposal to allow an immediate increase of 1.8 billion euro in advance payments under the European Social Fund.
The Commission also sets out a road map towards the European Employment Summit in Prague in May, which should agree on further concrete measures to save jobs and create them in the sectors of the future.
The Commission will organise a series of workshops with all key stakeholders in different member states in the approach to the summit.
The EC asks EU leaders to agree on a number of areas “where Europe can and should give a firm lead” on April 2 at the London G20 summit, building on the success it achieved by speaking with one voice at the Washington Summit in November 2008.
“The EU should make a united push to improve the global financial and regulatory system, focusing on: better transparency and accountability; appropriate regulation of all financial actors; tackling difficulties caused by uncooperative jurisdictions; boosting international supervisory cooperation; and reforming the IMF, Financial Stability Forum and World Bank,” the EC statement said.
“Europe should also promote global recovery by calling for a review of the global impact of fiscal measures taken so far, by promoting open trade and by inviting the London Summit to launch a multilateral initiative on trade finance and to reaffirm the Washington commitment to the Millennium Development Goals,” the EC said.