Commission puts forward proposals on financial stability

The European Commission has asked EU leaders to confirm, at next month’s summit, the guiding principles on financial stability both within and outside the Union.
A Commission press release said the ECOFIN Council agreed in October 2007 a road map for reinforcing European and global financial regulation and supervision to fill the gaps revealed by recent financial turmoil in the wake of the US sub-prime crisis.
The road map is based on four key areas of work: improving transparency; valuation of financial products, strengthening prudential requirements and making markets function better.
The Commission also wants the European Council to endorse a series of lines of action both in terms of internal policy and in international fora, including improving information provided by credit ratings agencies, by taking regulatory measures if the agencies do not act voluntarily, updating accounting and valuation rules, so that full information on the exposure of banks and other financial institutions to off-balance sheet vehicles is made available and encouraging prompt and full disclosure of losses by financial institutions.
The action also includes improving early warning systems on financial stability, fostering the effectiveness of EU networks of financial supervisors and ensuring strong and effective supervision of cross-border groups and working on a common framework for assessing the systemic implications of a potential crisis.
The Commission wants a political agreement with the Council and the European Parliament to deliver the necessary legislative changes before April 2009.