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Commission calls on EU leaders to move fast on financial market reform

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The European Commission is calling on EU leaders to further step up coordinated European action to fight the economic crisis. In its communication to the European Council summit on 19-20 March, 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 Larosière 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 2 April.

 

Commission President José 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 Larosière Report. And to pave the way for Europe to lead by example and by persuasion as we approach the G20 summit in London."

The banking system

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 25 February on removing impaired assets from banks' balance sheets.

Financial regulation and supervision

The Commission endorses – and asks EU leaders to endorse – the key principles set out by the de Larosière Group. 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 Commission 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 Larosière 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.

Press Release from President Barroso.

Communication from the European Commission.

Report from the European Policy Centre.

Article in the Financial Times.

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