The European Commission has published a speech that Charlie McCreevy (European Commissioner for Internal Market and Services) gave at the Public Affairs Ireland Conference on 18 September 2009. The speech was entitled Towards an integrated approach to regulation across the EU.
The theme of Commissioner McCreevy’s speech was regulation and supervision of the financial sector. He also discusses the role that regulation and supervision plays in the Commission’s strategy to help get Europe out of the financial crisis and prevent a similar crisis from recurring in the future.
Commissioner McCreevy states that the Commission has already introduced a number of regulatory initatives since the financial crisis started. He briefly discusses the draft Directive on Alternative Investment Fund Managers, briefly mentioning that its objective is to create a comprehensive and effective regulatory and supervisory framework for alternative investment fund managers at the European level. He also states that he does not believe that the initiative will damage the European hedge fund and private equity sector nor will it drive business outside the EU.
However, he does recognise that the proposed Directive can be improved in a number of ways, for example on technical issues such as depository arrangements and valuation.
On the Commission’s Recommendation on executive pay Commissioner McCreevy states that the intention is not to intervene in debates on what level of remuneration is just or appropriate. Instead the goal is a prudential one, to link pay and incentives to long term performance and prevent excessive risk taking behaviour.
On the Capital Requirements Directive Commissioner McCreevy states that the Commission plans to present, following appropriate impact assessment, proposals to address leverage and liquidity concerns and to introduce dynamic provisioning for banks. The Commission also intends to issue a Communication on the EU’s cross-border crisis management framework.
Commissioner McCreevy briefly discusses the Commission’s Communication on retail investment products. He states that the Commission will soon review the adequacy of existing deposit guarantee schemes and make appropriate legislative proposals.
Commissioner McCreevy states that the European Council has welcomed the Commission’s proposals to strengthen European financial supervision, both at the systemic level and at the level of individual financial institutions. The Commission has prepared legislation creating new supervisory bodies and this will be presented later this month.
In the final part of his speech Commissioner McCreevy looks at international regulation. He states that the best regulation and supervision in the world will be of no use to Europe, if the rest of the world is not appropriately regulated.
Commissioner McCreevy is especially pleased that the G20 has followed the Commission in proposing that banks and originators retain a proportion of the risk in assets which they securitize. He continues by stating that "amendments to that particular proposal made by the Council and Parliament, in my view, open up quite a number of loopholes and I expect that in its review the Committee of European Supervisors will identify all of those loopholes and come up with comprehensive proposals for closing them. In my view a globally consistent and loophole-free approach to this issue should be a high priority over the next 12 months."