The European Commission has published a speech by Charlie McCreevy (European Commissioner for Internal Market and Services) entitled The Financial Turmoil - The role of the EU Commission.

In his speech Mr McCreevy discusses the credit crunch and the EU policy response. In the first part of his speech Mr McCreevy discusses the ECOFIN Roadmap of October 2007.

The first objective of the ECOFIN Roadmap is the introduction of qualitative improvements in transparency for investors, markets and regulators. Mr McCreevy states that efforts need to be stepped up in respect of bank disclosure practices.

The second objective of the ECOFIN Roadmap is the upgrading of valuation standards. Mr McCreevy states that any possible changes to accounting standards should be carefully assessed and subject to proper consultation. He also states that there is a need for additional guidance on the valuation of complex and illiquid financial instruments. On disclosure rules, Mr McCreevy refers to the CEBS report setting out good practices with respect to banks’ transparency on activities and products affected by the credit crunch. He also states that there must be an examination of the interlinkages between accounting standards and capital requirement rules.

The third objective of the ECOFIN Roadmap is the strengthening of the existing prudential framework. Mr McCreevy mentions that the Commission will shortly come forward with proposals to revise the Capital Requirements Directive.

The forth objective of the ECOFIN Roadmap relates to market functioning and in particular the role and use of credit ratings. In relation to the IOSCO Code of Conduct Mr McCreevy states that it has not produced its desired effects. He believes that a regulatory solution at a European level is now necessary. In October Mr McCreevy intends to propose a registration and external oversight regime for rating agencies, whereby European regulators will supervise the policies and procedures followed by credit rating agencies.

In the final part of his speech Mr McCreevy discusses financial supervisory structures. In particular, he looks at how the role of the Level 3 Committees’ in convergence of supervisory rules and practices will be strengthened.

ViewEC speech - The Financial Turmoil - The role of the EU Commission, 3 July 2008