Besluit Raad Economische en Financiële Zaken voor nieuwe aanpak financieel toezicht en stabiliteit (en)

EU finance ministers met in Brussels on Wednesday for the last ECOFIN meeting of the Swedish Presidency and reached important agreements regarding a new financial supervisory structure, reverse charge for CO2 emission trading, and the implementation of fiscal exit strategies.

”Today’s Council agreement on financial supervision is truly groundbreaking. It represents a crucial step towards helping to prevent future crises and shows Europe’s commitment to rebuilding the financial supervisory infrastructure,” said Swedish Minister for Finance Anders Borg.

Ministers agreed on a general approach regarding the establishment of three new authorities for supervision at the micro level: the European Banking Authority, the European Insurance and Occupational Pensions Authority, and the European Securities and Markets Authority.

The ECOFIN Council agreed already in October on a general approach on the establishment of the European Systemic Risk Board, which will be responsible for macro-prudential supervision. With today’s agreement, there is now a complete supervisory package in place, which enables the Presidency to enter into negotiations with the European Parliament on a firm basis.

“I hope and trust that it will be possible to reach an agreement with Parliament in the first reading of this legislative proposal, in view of the need to get the new structure up and running in the course of the coming year,” stated Mats Odell, Swedish Minister for Financial Markets and Local Government.

Solving tax fraud in CO2 emission trading

The ECOFIN Council agreed on a general approach aimed at combating VAT evasion, which will give Member States the opportunity to introduce a reverse charge for VAT in relation to emission allowances. The agreement will help Member States to be more efficient in combating fraud and thus enhance the effectiveness of the emission trading market.

Postal services

Ministers agreed to continue working to resolve the VAT issues on postal services, and will take all necessary measures into account to solve the political problems originating from the VAT treatment of postal services.

First step in implementing fiscal exit strategies

The ECOFIN Council adopted decisions on new and existing excessive deficit procedures within the Stability and Growth Pact. These procedures are an important step in establishing country specific fiscal exit strategies, in line with the principles for fiscal exit already agreed by the Council in October.

“The Stability and Growth Pact is really proving its value as the cornerstone of fiscal policy in the EU,” commented Anders Borg.

Ministers decided to initiate the excessive deficit procedure for nine Member States (Austria, Belgium, the Czech Republic, Germany, Italy, the Netherlands, Portugal, Slovenia and Slovakia) that have budget deficits in excess of the 3 percent reference value. The Council also agreed on recommendations on when these Member States should correct their excessive deficits.

Ministers also agreed on revised recommendations for four Member States (France, Ireland, Spain and the United Kingdom) that were already subject to the excessive deficit procedures. These Member States have taken effective action to correct their deficits, but due to the changed economic situation, the recommendations have had to be revised.

Minister decided that Greece, which has been subject to an excessive deficit procedure since April this year, has not taken effective action to bring an end to the excessive deficit situation.

Principles for exit from financial market support measures

Ministers agreed on a number of principles on exit from financial market support measures. Exit should be duly coordinated among Member States to avoid negative spillover effects. The timing of exit may differ among Member States depending on the situation, taking into account that the main purpose of the measures is to preserve financial stability. The exit strategies should provide sound banks with the right incentives for a return to a competitive market and give other banks incentives to address their weaknesses. One way to create such incentives is to start the exit process by phasing out government guarantees.

The Council also stressed the importance of public assistance and bank profits being used to build up capital buffers and not to increase bank dividends or compensation. The financial sector should immediately implement sound compensation practices.

Improving financial stability arrangements in the EU

In order to deal more effectively with future crises Ministers agreed on the necessary work going forward to improve the EU’s financial stability arrangements. Important elements regarding regulation include measures for early intervention as well as bank resolution. On the non-regulatory side, work will continue on policy coordination, including burden sharing arrangements.

Guidelines for the EU 2020 Strategy

Ministers also agreed on guidelines for the EU 2020 Strategy (the future Lisbon Strategy), emphasizing in particular the need to increase growth potential through higher labour participation rates.