Summary from the informal ECOFIN meeting
On 12 and 13 September, Stefan Ingves and Anders Borg met the governors of the central banks and the finance ministers of the other EU countries in France. France holds the presidency of the EU for the second half of 2008.
The governors of the central banks and the finance ministers discussed the current economic and financial situation. During the meeting it was noted that the financial unease has continued and that this will last longer than previously supposed. The growth of the economy as a whole has also been weaker than was expected in the spring and inflation has been somewhat higher. Last autumn, ECOFIN adopted an action plan with measures designed to handle the weaknesses in the economy. This covered issues such as the banks and other financial companies openly reporting their risks and losses, the valuation of illiquid assets (which it is difficult to get a market price for), the review of regulations (such as the EU's capital coverage directive and regulations relating to the banks' own risk management), and the role of the credit rating agencies. The action plan was followed up at the meeting and it was noted that the work is proceeding as planned. The informal ECOFIN meeting called on the committees and authorities that are working to realise the plan to continue their untiring efforts. An important element of this work for the Riksbank is the crisis management exercise which, in the spring of 2009, will test the Memorandum of Understanding that regulates at the EU level how the authorities concerned should cooperate in the event of a cross-border financial crisis.
The meeting also dealt with a number of proposals to improve the supervision of financial companies in the EU. The aim is to increase the harmonisation of the regulations in the EU. A number of representatives of the financial markets and the European Parliament had been invited to attend the meeting to put forward their views on how such supervision should be conducted. As a result of this discussion, the informal ECOFIN meeting decided to support the ambition to introduce a common reporting format for the financial institutions which should come into use no later than 2012. The meeting also agreed on a number of points regarding cross-border financial institutes in order to guarantee a sound balance between the supervisory authority in an institute's home country and the supervisory authority in the host country. This largely entails guaranteeing that the supervisory authority of the host country has access to information and the possibility to influence decisions concerning the supervision of the cross-border institute or the financial Group operating in the host country.
Facts
Informal ECOFIN meetings are held twice a year and are attended by the central bank governors and finance ministers of the EU. The meetings are also attended by the relevant European Commissioners and the governor of the European Central Bank. No formal decisions are taken at these meetings but political agreements can be reached on ongoing cooperation within the EU. The informal ECOFIN meetings also offer the opportunity to discuss current issues.
