The EU's Roadmap for strengthening financial stability

 

1. Procedures and principles to enhance co-operation and preparedness

 

-          October 2007: adoption by EU Finance Ministers and Central Banks Governors of common principles for cross-border crisis management with the objective to have the common basis for financial crisis management between relevant authorities in the EU.

 

-        End 2007: Member States to decide whether to include an EU-dimension in the national mandates of supervisory authorities, i.e. a requirement to cooperate and to take into account financial stability concerns in all Member States (to be recalled in the context of the 'Lamfalussy' review).

 

-          Member States are encouraged to develop and sign specific 'voluntary co-operation agreements' between authorities in different Members States as soon as possible; and the Economic and Financial Committee will provide examples of such agreements by the spring 2008.

 

-        Spring 2008: EU Supervisory Authorities, Finance Ministries and Central Banks to sign an extended EU wide MoU, which will be built on the 2005 MoU and will include common principles on crisis management including on the sharing of fiscal burden; and a common analytical framework. An annex will include practical guidelines for crisis management.

 

-        End of 2008: authorities in Member States will use the common analytical framework for assessing a cross-border financial crisis.

 

-        2007-2009: the Commission to propose ways to clarify cooperation obligations including possible amendments to EU-banking legislation, especially to: clarify the existing obligations for Supervisory Authorities, Central Banks and Finance Ministers to exchange information and to cooperate in a crisis situation;  increase the information rights and involvement of host countries; clarify the role of the consolidating supervisors and facilitate the timely involvement of relevant parties in a crisis situation; and examine whether, to this end, legislative changes are necessary, including to reinforce the legal requirements for supervisory collaboration and information sharing. Progress report by the Commission to the EFC by the end of 2007. Commission proposal end 2008; and adoption by EP/Council by the end of 2009.

 

-        2009: the Economic and Financial Committee to conduct an EU wide crisis simulation exercise in spring 2009 to test the proposed arrangements and to report to ECOFIN Ministers on its conclusions in autumn 2009.

 

2. Review the tools for crisis prevention, management and resolution

 

-        2008: the Financial Services Committee and the Commission to identify specific obstacles to use of the tools in cross-border situations and propose changes, to ensure  the availability of relevant tools at the national level and the functionality of tools for crisis management and resolution taking into account the cross-border dimension.

 

-        2008: the Commission and Member States shall work towards clarifying when a banking crisis could be considered by the Commission as “a serious disturbance for the economy” (under the Treaty and State aid rules) and the Commission to consider streamlining procedures focusing on how State aid enquiries under critical circumstances can be treated rapidly.

 

-        2007-2009: the Commission to assess the possible extension of  the scope of the present EU-Directive on winding up of credit institutions to include  insolvent subsidiaries with the objective to increase the efficiency, the optimal reorganisation and winding up of cross border banking groups taking due consideration of the interests of all stakeholders concerned. The Commission to launch a public consultation October 2007; legal study of obstacles mid 2008; and release a Commission Green Paper by end 2008.

 

-        2007-2009: work started in spring 2007 to be continued by the Commission with the objective to clarify EU Deposit Guarantee Schemes Directive, especially: practical agreement and clarification of the scope of the Directive and tasks of DGS, 'topping-up', information exchange between schemes, reducing pay-out delays and improving depositor information. Deposit Guarantee Schemes and relevant authorities in Member States will be involved. Final results are expected by March 2009.

 

2007-2009: alongside the review of the winding up Directive followed by Commission proposal mid-2009, the Commission to perform a feasibility study on reducing barriers for cross-border asset transferability while introducing appropriate safeguards within banking, insolvency and company law, taking into account that the reallocation of assets in a crisis affects the ability of stakeholders in different legal entities to pursue claims. The overall objective is to reinforce the primacy of private solutions, avoid counter-productive ring-fencing of assets, and facilitate a smooth management of a crisis.

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