On Tuesday, the Economic and Financial Affairs Council of the European Union (“Ecofin”) announced various conclusions reached at its meeting held earlier in the day, including compromises regarding reform of the EU’s framework for financial supervision and coordination of member state economic policies. The ministers did not, however, reach any consensus on bank levies or other financial transaction tax proposals.

Ecofin endorsed an agreement with the European Parliament on a number of key elements regarding reform of the EU’s framework for financial supervision. These key elements include the creation four new entities, intended to be operational as of January 1, 2001:

  • A European Systemic Risk Board;
  • A European Banking Authority;
  • A European Insurance and Occupational Pensions Authority; and
  • A European Securities and Markets Authority.

The European Parliament is expected to approve these measures during its plenary session starting on September 20th, and, assuming the European Council will formally approve them at a subsequent meeting.

Ecofin also enabled a “European Semester” to be introduced, in order to boost the coordination of member states’ economic policies. This “European Semester” would begin each March with the identification by the European Council of the main economic challenges for the European Union. The European Council would then give strategic advice on policies designed to address these issues. During April, each member state would review their budgetary strategies and draft national financial reforms. In June and July, the European Council and Ecofin would provide policy advice to the member states, before the member states finalize their annual budgets.

Finally, Ecofin discussed, but reached no agreement regarding, options for financial industry contributions following the financial crisis, including levies on banks and taxes on certain types of financial transactions.

The Ecofin meeting followed a meeting of the European Council’s Task Force on economic governance, which was established by the European Council on March 26 in order to create a more robust framework for crisis resolution, along with forward-looking surveillance of economic and budgetary risks. On Monday, Herman Van Rompuy, President of the European Council, announced that the Task Force had met and had an in-depth discussion on national fiscal frameworks, macroeconomic surveillance and appropriate sanctions, and that President Van Rompuy will report to the European Council later this month regarding the Task Force’s progress since its last meeting in June.