EP Committee on Economic and Monetary affairs public hearing on economic governance and stability framework of the EU: statement by Michel Barnier
End production: 15/09/2010 First transmission: 15/09/2010
On 15 September 2010, Michel Barnier, Member of the EC in charge of Internal Market and Services, took part in a plenary session of the European Parliament on economic governance and stability framework of the EU, in Brussels.
The EP Committee on Economic and Monetary Affairs had an exchange of views on the future framework for economic governance in the European Union. This exchange of views is part of the Parliament's work to establish its position on the main aspects of the new governance framework before the European Council in October 2010. On 30 June 2010, the Commission adopted a Communication on "Enhancing economic policy coordination for stability, growth and jobs - Tools for stronger EU economic governance" and is in the process of preparing legal proposals. On 5 July 2010, the rapporteur in the EP Committee on Economic and Monetary Affairs presented his draft report with recommendations to the Commission on "Improving the economic governance and stability framework of the Union, in particular in the euro area".
Only the original language version is authentic and it prevails in the event of its differing from the translated versions.
||Exterior view of the European Parliament building in Brussels
||Soundbite by Michel Barnier, Member of the EC in charge of Internal Market and Services (in FRENCH) saying that the derivative products are tremendously important to the economy; in terms of volume of transactions it's grown considerably over the last 15 years and account now for over 600.000 billon dollars; the situation is very far from satisfactory because 80% of that trade today is over the counter trading without any reporting or adequate inspection;
so they will put transparency everywhere on derivative products; they want to make sure that they are traceable; they want to do that by encouraging standardisation; saying that thanks to the EP and his rapporteur Sven Giegold, ESMA will be allowed to prohibit these derivative products if they seem dangerous (2 shots)
||Soundbite by Michel Barnier (in FRENCH) saying that secondly, nearly all transactions in the future will be registered in specific registers; these would be sort of 'black boxes' keeping track of all these movements.
||Soundbite by Michel Barnier (in FRENCH) saying that thirdly, they will generalize and encourage compensation which is another way of reinforcing transparency and of making sure that these transactions are more secure; that will be done by adjusting the level of funding requirements and of capital; the financial institutions will be encouraged to do so by reducing the capitalisation requirement.
||Soundbite by Michel Barnier (in FRENCH) saying that they will - like the Americans did - take into account these specific problems of businesses, many of which, when they export, have recourse to derivatives to hedge their exchange risks; in these cases they believe that these businesses don't use derivatives to speculate but to protect their own activity and the jobs that depend on them in Europe.
||Soundbite by Michel Barnier (in FRENCH) saying that the sale of securities or financial assets with the aim of buying them back - sometimes even not knowing when they sell them where they will be able to cover those costs – is something that has been done for a long time; without being ideological about it, they are of the opinion that short selling specially on debt markets may have certain advantages for facilitating liquidities; so they are not going to tackle this issue ideologically, but with the aim of forcing people to be transparent and responsible.
||Soundbite by Michel Barnier (in FRENCH) saying that they will considerably strengthen the laws governing bare sales so that if someone is short selling he has the security he needs to complete the transaction by taking out a loan or an equivalent method; if that precaution is not taken, and that the market operator is not able of supplying the securities within three days, on the fourth day he will have to settle by cash.
||Cutaways of the participants (2 shots)