Reform packages discussed by US, EU

The Economic and Monetary Affairs Committee of the European Parliament met the Banking Committee of the US Senate yesterday to exchange views on reform packages being proposed by the US and the EU.

Maltese MEP Edward Scicluna, who is the EP committee’s vice-president, was present for the meeting.

In his intervention Prof. Scicluna touched on the main issues common to both the Obama Reform Package and the proposals being set before the EP in the near future.

The US side is proposing a Financial Services Oversight Council to be made up of the heads of each of the main financial regulatory agencies.

Their aim is to take a system-wide perspective and report to Congress on emerging risks every year. Other proposals include stricter regulation by the Federal Reserve of the most interconnected financial institutions and critical systems, the strengthening of capital and liquidity requirements and reducing the reliance on credit rating agencies.

Another US proposal is the establishment of a Consumer Financial Protection Agency to eliminate fierce competition between financial institutions and regulators which could be harmful to the consumer.

Following several EP requests, the European Commission is expected to propose a financial supervision package during the last week of September.

This would consist of a European Systemic Risk Board to monitor and assess risks to the stability of the financial system as a whole, providing early warning of systemic risks that could be building up and recommendations for action.

It would also be proposing the setting up of a network of national financial supervisors working in tandem with the new European Supervisory Authorities. This should foster harmonised rules and coherent supervisory practice and enforcement. The network is to be based on the principles of partnership, flexibility and subsidiarity.

Further meetings between representatives from the United States Congress and the European Parliament are expected to be held on a regular basis during the current EP legislature.