The European Commissioner for Economic and Monetary Policy, Joaquín Almunia, has signalled ahead of the international summit in Washington that the Commission is prepared to use competition rules to ensure that a level playing field is maintained between beneficiaries and non-beneficiaries of state aid and to prevent distortions in the internal market.
He warned that any optimism that the global economy might avoid a severe slowdown has now evaporated – it is clear that 2009 and even 2010 will be difficult years. The Commission has accelerated work on a package of precise measures that tackle shortcomings in the financial sector, already proposing reforms to capital requirements, deposit guarantees and accountancy rules.
Speaking to the 2nd Brussels’ International Economic Forum, Almunia outlined the EU response to the financial crisis, pointing out that governments, the Commission and the European Central Bank (ECB) have been working closely together to contain the turmoil, protect savings and maintain a flow for credit for businesses and households. “Initial market reactions to these rescue packages have been positive. There has been a modest improvement in the functioning of interbank markets in the past weeks. Yet conditions remain precarious,” he said. “We are monitoring their [rescue packages] implementation closely.”
The Commission plans to implement measures to tighten up the regulation of credit rating agencies, followed by an initiative on executive pay. It is also working on regulating derivatives, hedge funds and private equity. A high level group, chaired by Jacques de Larosière, has been set up to assess cross-border supervision in Europe and will present its first results to the European Council (EC) in the spring.
“We are realistic,” said Almunia. “We know that success will not come easily or quickly. The current framework for global governance makes it particularly difficult to generate the ownership and legitimacy for real change. Which is why we must grasp this opportunity to drive forward a restructuring of global governance – including the Bretton Woods institutions – so that they reflect the geo-political realities of the 21st century.”
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