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EU’s Position: Regulations on the financial sector

Term Paper 2010 11 Pages

Politics - International Politics - Topic: European Union

Excerpt

Content

Introduction

The EU’s Regulatory reforms after the financial crisis
A. The initial response to the financial crisis
B.. European Framework for Action
C. De Larosiere Report and European plan for Recovery.

Conclusion

Bibliography

Introduction

European Union consists of a unique integration model not only due to the long term and ongoing process but also because of the Institutions and regulations under 27 Member States, which attempt to comprise and mostly to harmonize the national laws. Especially after Maastricht Treaty, when the supranational building of the EU was introduced plenty of reforms had introduced in order to increase from the one hand the effectiveness of the complicated and bureaucratic body of EU and from the other hand to control the way that European Union and the individual Member States function in a more effective and productive way.

After the adoption of a single currency- the Euro- for sixteen of the Members of the EU in parallel of the important enlargement the structural body of the EU became even more complicated that needed the consistent control whether structural reforms had to be introduced in order the effective function of the EU was to be assured. Under these circumstances, the financial sector is of the greatest importance within the EU as it is -so far- the basement of the integration model and consists of the guardian of deepening integration within the EU. Therefore, the supervision and the reforms in financial services within EU has increased dramatically from 1993, after the Maastricht Treaty and the introduction of supranationality, through 2004-with the great Eastern enlargement and finally until now that the current financial crisis consisted a shock for EU, that attempted to implement new measures and to establish institutional changes in order to supervise the financial sector effectively in a long term.

The EU’s Regulatory reforms after the financial crisis

A. The initial response to the financial crisis

The recent economic and financial crisis has highlighted the need for significant changes to European financial regulation and its regulatory counterpart: supervision[1]. The European common Market after the financial crisis and mainly due to the spill-over effect-the spreading effects from the one country through the other and then to all- proved that the financial sector within the EU was vulnerable and demanded further reforms to the financial structure in order to control the crisis itself and the spill-over effect as well. Furthermore, EU’s regulatory reform attempts to prevent a further financial crisis mainly by predicting the vulnerable points of the financial system so that to reform them and sequentially to avoid an unwilling potential financial crisis. Therefore, we can argue that the regulatory reform of the EU concerning the financial sector is based upon two main aspects: the short-term goals and the long terms goals. In a short­term EU’s regulations concern directly the current financial crisis and how EU will overtake it using the already existing regulations and mainly by adopting the “European Framework for Action”. The long-term goals consist of an ongoing process, which mainly initiated two reports concerning the reform of the international financial governance system, the “de Larosiere Report” and afterwards the “European plan for Recovery”.

B. European Framework for Action

The initial response to the financial crisis was the European Framework for Action, which was released by the European Commission by the end of 2008 (29th of October 2008) and basically attempted to coordinate the actions taken by the national Parliaments of the Member States. It is clearly mentioned that the European Framework for Action “is to promote debate and agreement at European level on the general policy approach and the top priority is to minimize the impact onjobs, purchasing power and prosperity of the European citizens”[2] [3].

The European Framework for Action consists of short-term plan overcoming the current financial crisis and is based upon three main strands :

I. A new Financial market architecture at the EU level: The basis of this architecture involves implementing measures that EU members have announced as well as providing for : 1) continued support for the financial system from the European Central Bank and other banks, 2)rapid and consistent implementation of the bank rescue plan that has been established by member states, 3) decisive measures that are designed to contain the crisis from spreading to all member states. Proposals include: deposit guarantees and capital requirements, regulation and accounting standards, credit rating agencies, executive pay, capital market supervision and risk management.

II. Dealing with the impact on the real economy: Short-term actions to EU’s structural agenda, while investing in the future through: 1)increasing R&D innovation, 2)promoting flexecurity, 3)enhancing competiveness by promoting green technology

III. A global response to the financial crisis: Measures should include:1)strengthening international regulatory standards, 2)strengthening international coordination among financial supervision, 3)strengthening measures to monitor and coordinate macroeconomic policies. Key principles: Efficiency, Transparency, Accountability.

[...]


[1] Beros Marta Bozina, Europe’s Regulatory Reform after the crisis-a macroprudential perspective, Vol. 16, Columbia Journal of European Law online, pp.47

[2] José Manuel Duräo Barroso, President of the European Commission, Summary: 29 October 2008, Brussels "From financial crisis to recovery: A European framework for action", European Union: http://www.europa-eu- un.org/articles/en/article 8265 en.htm

[3]. . . James k.jackson (2010), Financial market supervision: European perspective, congressional research service, pp.13-14

Details

Pages
11
Year
2010
ISBN (eBook)
9783640737185
ISBN (Book)
9783640737444
File size
517 KB
Language
English
Catalog Number
v160552
Institution / College
University of Flensburg
Grade
A
Tags
EU’s Position Regulations

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Title: EU’s Position: Regulations on the financial sector