On 18 September 2009, the European Commission published a statement ahead the G20 summit in Pittsburgh. The statement was produced following an informal meeting of EU Heads of State or Government.
On financial market reform the statement calls for:
- The G20 to commit to a globally coordinated system of macro-prudential supervision, based on close cooperation between the International Monetary Fund, the Financial Stability Board and the supervisory authorities, with effective exchange of information.
- A restructuring of the banking sector, in parallel with action to improve the quality of bank balance sheets.
- All G20 countries to adopt the Basel II capital framework, in a consistent and coordinated way. Existing loopholes in the Basel framework to be closed.
- The G20 to strengthen oversight of systemically important financial institutions by enhancing their supervisory and regulatory requirements.
- The approach to non-cooperative jurisdictions agreed at the London summit to be fully implemented. The G20 to agree on a programme of peer review, capacity building and counter measures that could be put in practice as of March 2010 for jurisdictions that have not effectively implemented standards.
The statement also calls for the promotion of responsible remuneration practices in the financial sector. In particular the G20 should commit to agreeing to binding rules for financial institutions on variable remuneration backed up by the threat of sanctions at national level, covering the following principles:
- Enhanced governance to ensure appropriate board oversight of compensation and risk.
- Strengthened transparency and disclosure requirements.
- Variable remuneration including bonuses to be set at an appropriate level in relation to fixed remuneration and made dependent on the performance of the bank, the business unit and the individuals.
- Prevent stock options from being exercised, and stocks received from being sold, for an appropriate period of time.
- Prevent directors and officers from being completely sheltered from risk.
- Give supervisory boards the means to reduce compensations in case of deterioration of the performance of the bank.
- Explore ways to limit total variable remuneration in a bank to a certain proportion either of total compensation or of the bank’s revenues and/or profits.