29 October 2008

Commission calls for wider economic policy co-ordination

The Commission Communication sets out a three part approach which will be developed into an overall EU recovery action plan that includes a new financial market architecture at EU level.

The Commission approved a Communication on how best to respond to the current crisis and its aftermath. Co-ordinating national action inside a set of clear EU principles, complemented with direct EU action, proved to be the right approach, the Communication states. It sets out a three part approach which will be developed into an overall EU recovery action plan which includes a new financial market architecture at EU level, a global response to the financial crisis, and a way how to deal with the impact on the real economy.

 

The fact that the EU was able to take collective action when the pressure on financial markets was at its most intense was central to the stabilisation of the banking sector, the Communication states. The EU should build on this success and decide to tackle the next stages of the crisis in a united, co-ordinated manner turning these challenges into opportunities; adding selected short term measures to the Lisbon Strategy for growth and jobs.

 

“In parallel to the stabilisation of the crisis, it will be necessary to move on to the phase of restructuring the banking sector and, at some stage in the future, returning banks to the private sector,” the paper states, adding that “the current national-based organisation of EU supervision limits the scope for effective macro-prudential oversight”.

 

Touching upon the impact on the real economy, the Communication calls to “adapt the medium to long term measures of the Lisbon strategy to take account of the crisis” and proposes a series of proposals.

 

With regard to the global response, the paper notes that the financial crisis has raised issues of global governance which go beyond the purely financial sector and recommends “a series of measures to reform the global financial architecture.”

 

This includes strengthening the international consistency and quality of regulatory standards, strengthening international co-ordination among financial supervisors, macro-economic surveillance and crisis prevention - including developing early warning systems - , and further developing the capacity to deal with financial crisis and resolution capacities, at the national, regional and multilateral levels.

 

We must refocus policy at European and national level on protecting our citizens and businesses, on restoring confidence and restoring Europe's economies to health, Commission President Barroso said.

 

On 26 November the Commission will propose a comprehensive EU recovery plan which will include targeted short-term actions to add to the medium-term reform agenda under the Lisbon Strategy.

 

Speech Barrose

Communication

 

© European Commission