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Time to stand united - 04/03/2009

European flag and national flags of members states © EC

Urging EU leaders to move fast to restore confidence in the markets, the commission sets out proposals for a comprehensive reform of the financial system.

The plan calls for a supervisory system combining greater oversight at EU level with a stronger role for national supervisors. It is based on an EU-commissioned report by a group of banking experts led by the former French central banker Jacques de Larosière.

The commission agrees with the group on the need to set up a pan-European authority to monitor economic risks. It also supports the recommendation that the 27 member countries adopt common regulatory standards but leave the job of looking after individual banks to national regulators.

The plan now goes to the European council, which meets later in March. EU leaders aim to lay the ground for April’s meeting of the Group of 20 industrialised and developing nations in London. Regulatory reform will be on the agenda, and the EU wants to make a united push to improve the global financial system.

The 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,” said president Barroso.

The plan proposed to EU leaders outlines other measures to curb risk and restore trust in markets, including increased oversight of banks’ pay policies.

The 27 nations are spending about 3.3% of the EU’s gross domestic product on programmes to stoke growth this year. The commission calls on EU leaders to endorse clear principles for further action, such as support for open trade, a low-carbon economy and budgetary discipline.

The crisis has raised concerns that some EU countries are resorting to protectionism to bolster their economies. At an informal summit on 1 March, EU leaders promised to avoid action that could fragment the EU single market.

EU members should also step up efforts to tackle unemployment, which could approach 10% in 2010 for the first time since the 1990s.

 

Financial crisis - facts and policies

 

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