European leaders at a summit in Brussels agreed late Thursday to back the creation of a cross-border financial regulatory system with the aim of staving off future credit crises.
REUTERS - European Union leaders will back the creation of a cross-border system of bank supervisors on Friday aimed at better preparing the bloc to deal with any new credit crisis, a summit draft showed.
Agreement was reached after late-night summit talks on Thursday alleviated British fears that the new pan-EU bodies could undermine the power of its national regulators to guide its huge financial service sector.
Leaders also unanimously agreed to support Jose Manuel Barroso’s bid for a second five-year term as president of he EU’s executive European Commission.
“The European Council took a number of decisions ... with the aim of protecting the European financial system from future risks and ensuring that the mistakes of the past can never be repeated,” said a draft summit statement obtained by Reuters.
The financial supervisory proposals involve creating three pan-European regulatory bodies next year to ensure countries introduce new rules on supervision, and a new European Systemic Risk Board that would monitor risks to stability.
The agreement followed U.S. President Barack Obama’s announcement on Wednesday of what he called the most sweeping reform of U.S. financial supervision since the 1930s.
Reacting to British concerns, the summit draft stated explicitly that any decisions taken by the new bodies “should not impinge in any way on the fiscal responsibilities of member states”—for example, by forcing a costly bank bail-out.
Britain had feared its national regulator would lose its power to steer the financial services sector, which is crucial to its economy, and opposed plans for the European Central Bank (ECB) to run the European Systemic Risk Board permanently.
The summit draft noted that members of the ECB’s General Council of the ECB should elect the chair of the European Systemic Risk Board. It was not clear whether this would be acceptable to Britain, and the draft statement can still be amended by leaders at talks on Friday.
Barroso, a former Portuguese prime minister, set out his plans to the EU leaders over dinner.
“We want to have a strong president, a strong partner who communicates well,” said Czech Prime Minister Jan Fischer, whose country holds the rotating EU presidency. “I am very glad that Jose Manuel Barroso received unanimous support.”
Barroso, 53, still needs the European Parliament’s approval next month and a more formal endorsement by the EU leaders. But his centre-right allies are the biggest force in the assembly and he is expected to win enough votes to be reappointed.
The leaders hope on Friday to agree on steps to help the Irish government win voters’ backing for the Lisbon treaty aimed at streamlining EU decision-making, which they rejected in a referendum last June.
Agreement would pave the way for a new referendum, which Dublin would be likely to hold by early October.
Date created : 2009-06-19