EU-ministers economische en financiële zaken: overleg over hervormingen financiële sector EU (en)
The EU’s Economy and Finance Ministers and Central Bank Governors discussed the reform of the financial sector, focusing on the creation of a Banking Union and in particular the establishment of a Single Supervisory Mechanism as well as the strengthening of the shadow banking sector, during their Informal Meeting in Cyprus. The meetings, which took place at the ‘Filoxenia’ Conference Centre in Lefkosia (Nicosia) on 14 and 15 September, also included an exchange of views on the issue of the IMF i Executive Board representation by advanced EU countries.
Today, ministers and governors held a useful exchange of views on how to appropriately follow-up to the June European Council on the banking union in general and more specifically on the establishment of an effective Single Supervisory Mechanism (SSM).
Establishing an effective Single Supervisory Mechanism
At the Euro area summit in June 2012, Heads of State or Governments agreed that the European Commission should present a proposal for the establishment of a Single Supervisory Mechanism and asked the Council to elaborate on the proposal by the end of 2012. With the proposed new single mechanism, ultimate responsibility for specific supervisory tasks related to the financial stability of all Euro area banks will lie with the European Central Bank (ECB i), however national supervisors will continue to play an important role in day-to-day supervision and in preparing and implementing ECB decisions. The creation of a Single Supervisory Mechanism will be the first step in breaking the negative feedback loop between the banks and the sovereign and will ultimately help to promote stability in the euro area and the wider European economy.
Cyprus’ Minister of Finance, Vassos Shiarly, said:
“Today, based on the Commission´s proposal, we initiated discussions on a very important issue for the future of the EU, the establishment of a banking union and especially a Single Supervisory Mechanism. I would like to express my satisfaction on the outcome of the discussions and assure you that the Cyprus Presidency will put every effort for the soonest possible establishment of this Mechanism.”
Enhancing the regulation and supervision of the shadow banking sector
Ministers and governors also had the opportunity to provide input on how to take forward the issue of shadow banking, especially regarding issues of regulation.
Non-bank credit intermediation, or shadow banking, is an important additional source of market liquidity and funding for investors. It offers an alternative to traditional bank deposits and is often seen as important in providing extra liquidity to the market at a time when banks are deleveraging. Currently, the shadow banking sector is subject to lower levels of regulation than traditional banking. As a result, it is generally acknowledged that the regulation and supervision of shadow banking needs to be strengthened.
According to Mr Shiarly, there was a fruitful discussion on how to best reform the shadow banking sector and it was agreed that further work needs to be undertaken in order to ensure its effective functioning.
On the first day of the meeting, Ministers and Governors exchanged views on how to best fulfill the EU commitments made in the context of IMF quota and governance reforms that took place in 2010.
As part of the IMF reforms during 2010, advanced European countries committed to reduce their combined representation in the IMF Executive Board by two chairs, at the latest by the time of the first regular election after the 2010 quota reform takes effect. After a round of discussions and a number of actions, the advanced European countries` representation in the IMF Executive Board was reduced by 1.64 chairs.