Verklaring na informele Ecofin-raad 14/15 september 2007 (en)

We discussed the economic situation and financial market developments.

We are experiencing a period of volatility and re-appraisal of risk in global financial markets, triggered by difficulties in the subprime mortgage market in the United States.

However, macro economic fundamentals in the EU are strong. World growth is robust, with sustained dynamism in emerging economies and in Europe expected to continue to balance the slowdown in the US. Healthy corporate profitability and continued improvement of labour market conditions should provide on-going support to domestic demand. After several years of high profitability in a financial environment of historically low credit spreads, our financial institutions are sound and resilient and can weather the current episode of financial-market volatility.

Looking ahead, the current financial market volatility and its possible implications for global credit conditions imply heightened uncertainties and downside risks to the outlook for economic growth. Nevertheless, going forward, most projections see euro area real GDP growth in the second half of 2007 and in 2008 as being in line with potential growth. We are, in cooperation with supervisory authorities, monitoring closely developments in financial markets and the economy.

We also discussed preliminary lessons to be drawn from recent financial-market volatility. Our regulatory and supervisory rules are sound, and the Capital Requirement Directive now being implemented as well as on-going work on Solvency II Directive, should reinforce our framework further. Financial innovation enhances market efficiency but also raises obvious challenges to the regulatory and supervisory authorities. In this context, we asked the EFC to review alongside our international partners how to further improve transparency of complex financial instruments, of institutions and vehicles as well as how to improve valuation processes, risk management and liquidity stress testing. They will also take a closer look at the role of rating agencies in structured finance.