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Europaudvalget 2007-08 (1. samling)
2822 - økofin Bilag 4
Offentligt

22. oktober 2007

6. kontor, MIJ

Referat af rådsmødet (ECOFIN) den 9. oktober 2007

Dagsordenspunkt:

Proceduren for uforholdsmæssigt store underskud

vedr. Tjekkiet

Rådet vedtog en henstilling til Tjekkiet under Traktatens artikel 104.7, om korrek-

tion af det uforholdsmæssigt store underskud senest i 2008. Henstillingen følger

op på Rådets beslutning under artikel 104.8 fra 10. juli 2007 om, at Tjekkiets fi-

nanspolitiske tiltag til opfyldelse af Rådets oprindelige henstilling fra juli 2004, har

været utilstrækkelige.

Dagsordenspunkt:

Proceduren for uforholdsmæssigt store underskud

vedr. Storbritannien

Rådet traf en beslutning under Traktatens artikel 104.12, som ophæver Rådets

tidligere beslutninger om eksistens af uforholdsmæssigt store underskud i Storbri-

tannien. Storbritannien havde i finansåret 2006/2007 et underskud på de offen-

tlige budgetter på under 3 pct. af BNP og budgetforbedringerne vurderes at være

holdbare.

Dagsordenspunkt:

Offentlige finanser i EU –

Vækstpagtens forebyggende del

Stabilitets-

Rådet havde en drøftelse af Stabilitets- og Vækstpagtens forebyggende del og

mulighederne for yderligere styrkelser af denne. Rådet vedtog konklusioner herom

(jf.

vedlagte bilag).

I konklusionerne fremhæves det bl.a. at de medlemslande, som

endnu ikke opfylder sine mellemfristede målsætninger for de offentlige finanser

(MTO), bør fremskynde konsolideringen af de offentlige finanser ved, herunder

reducere offentlige budgetunderskud og gældskvoter. Endvidere bør

medlemslandene arbejde videre med holdbarhedsbaserede mellemfristede målsæt-

ninger.

Dagsordenspunkt:

Kvalitet af de offentlige finanser – modernisering af

den offentlige sektor

Rådet vedtog rådskonklusioner (jf.

vedlagte bilag),

som følger op på drøftelsen af

sagen på det uformelle rådsmøde (ECOFIN) i september 2007. Rådskonklusion-

erne betoner bl.a. vigtigheden af moderne offentlige administrationer mhp. at

styrke kvaliteten af de offentlige finanser. Rådet ventes at vende tilbage til sagen i

løbet af foråret 2008, mhp. på en drøftelse af effektiviteten af de offentlige udg-

ifter til konkrete formål, herunder uddannelse, forskning og udvikling.

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Dagsordenspunkt:

Den økonomiske og finansielle situation

Rådet havde en drøftelse af den aktuelle økonomiske og finansielle situation i EU

med udgangspunkt i den makroøkonomiske situation og finansielle stabilitet i lyset

af den senere tids turbulens på de finansielle markeder. Rådet nåede bl.a. til

enighed om at igangsætte analyser og vurderinger af behovet for eventuelle juster-

inger i lovgivningen og de reguleringsmæssige rammer for den finansielle sektor.

Dagsordenspunkt:

Bedre regulering

Rådet vedtog rådskonklusioner (jf.

vedlagte bilag),

som bl.a. støtter Kommissionens

igangværende arbejde med målinger og reduktioner af de administrativer byrder i

EU. Konklusionerne følger bl.a. op på aftalen fra Det Europæiske Råd i marts

2007 om 25 pct. reduktion i 2012 af de administrative byrder, som stammer fra

EU-lovgivning. I konklusionerne opfordres medlemslandene endvidere til senest i

2008 at fastsætte nationale reduktionsmål, som svarer til ambitionerne i den fælles

målsætning.

Dagsordenspunkt:

Flexicurity – Økonomiske aspekter

Rådet drøftede Kommissionens meddelelse vedr. flexicurity og vedtog råd-

skonklusioner herom (jf.

vedlagte bilag).

I konklusionerne fremsættes bl.a. 8 fælles

principper, som skal danne grundlag for udbredelse af flexicurity blandt EU-

medlemslandene. I konklusionerne fremhæves det bl.a., at flexicurity indebærer

fleksible og pålidelige kontraktuelle forhold, strategier for livslang læring, effektive

aktive arbejdsmarkedspolitikker og moderne sociale understøttelsessystemer. Flex-

icurity bør endvidere tilpasses de specifikke omstændigheder og arbejdsmarkeder i

hvert enkelt medlemsland.

Medlemslandene vil med overgangen til den nye cyklus for de Integrerede Ret-

ningslinier i 2009 blive bedt om, at rapportere om deres flexicurity strategier i

deres Nationale Reformprogrammer.

Dagsordenspunkt:

Dialog med tredjelande

Kommissionen orienterede kort Rådet om den seneste udvikling i de bilaterale

dialoger med tredjelande på det økonomiske, finansielle og reguleringsmæssige

område, herunder med USA, Japan, Kina, Rusland og Indien. Kommissionens

orientering fokuserede bl.a. på dialogerne vedr. regulering af markedet for finansi-

elle tjenesteydelser.

Dagsordenspunkt:

Clearing og afvikling

Rådet vedtog rådskonklusioner vedrørende clearing og afvikling af værdipapirer

(jf.

vedtalte bilag).

I konklusionerne gives en status for de igangværende initiativer og

opfordrer til fortsat fremdrift, således at målet om en effektiv infrastruktur på det

europæiske værdipapirmarked opnås. Af igangværende initiativer nævnes bl.a.

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markedsdeltagernes "Code of Conduct", den tekniske fælles platform TARGET2-

Securities samt fjernelse af de såkaldte Giovannini-barrierer på det lovgivnings- og

skattemæssige område.

Dagsordenspunkt:

Finansiel stabilitet i EU (Kriseberedskab)

Rådet vedtog rådskonklusioner, der sigter på at styrke den eksisterende ramme for

håndtering af finansielle kriser i EU (jf.

vedlagt bilag).

I konklusionerne præsenteres

bl.a. ni fælles principper til håndtering af en stor grænseoverskridende finansiel

krise, herunder at de medlemslande, der forventes at være disponeret over for en

sådan grænseoverskridende krise, indgår frivillige samarbejdsaftaler. I konklusion-

erne annonceres endvidere tiltag, som bør implementeres eller analyseres inden

for de kommende par år, herunder et fælles analyseredskab og fælles procedurer til

håndtering af konkrete kriser.

Uden for dagsorden:

Finansiering af Galileo

Rådet havde med udgangspunkt i den seneste udvikling i sagen om satellitnaviga-

tionssystemet Galileo – herunder Kommissionens forslag til en finansierings-

model, som foreslår at der flyttes midler mellem udgiftskategorierne på EU’s

budget – en udveksling af synspunkter herom.

Diverse:

I marginen af mødet havde ministrene en drøftelse af den økonomiske situation i

EU, og formanden for eurogruppen afrapporterede fra gruppens møde den 8.

oktober 2007.

Under frokosten drøftede ministrene perspektiverne for udbygning og for-

stærkning af EU’s investeringsaktiviteter i Middelhavsområdet, herunder med

udgangspuntk i EIB’s strategiske rolle.

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Bilag:

Rådskonklusioner vedr. offentlige finanser i EU – Stabilitets- og Vækstpagtens

forebyggende del:

"Ministers discussed the Commission's Communication on Public finances in

EMU-2007. They agreed that ensuring progress towards sustainable fiscal posi-

tions is a key priority, in line with the preventive arm of the Stability and Growth

Pact (SGP) and the three-pronged sustainability strategy, so as to prepare also for

the impending budgetary impact of ageing populations. Against the background

of favourable economic conditions, the budgetary situation has significantly im-

proved in most EU Member States, but there is a need to make sure that the posi-

tive momentum of fiscal adjustment is maintained. The SGP provides the appro-

priate framework and should be fully implemented. All countries not yet at their

medium-term objective (MTO), should speed up the pace of deficit and debt re-

duction and allocate higher-than-expected revenues to this objective. In particular,

Member States of the euro zone or ERM II should pursue an annual adjustment

in cyclically adjusted terms, net of one-off and other temporary measures, of 0.5

% of GDP as a benchmark. The adjustment effort should be higher in good

times.

Recalling their conclusions of October 2006, Ministers confirmed the importance

of national fiscal rules and institutions, including monitoring mechanisms, in the

attainment of sound budgetary positions. In particular, they acknowledged that

rules-based multiannual fiscal frameworks at national level could help to ensure

adherence to medium-term budgetary plans, including by controlling expenditure.

In line with the Code of Conduct, information on national fiscal frameworks and

relevant innovations in national rules and institutions should continue to be re-

ported in the annual updates of the Stability and Convergence Programmes

(SCPs). Ministers recall the importance of domestic ownership, including the ap-

propriate involvement of national Parliaments.

Ministers confirmed that long-term fiscal sustainability, notably the future impact

of ageing, should better be taken into account in the medium-budgetary objectives

(MTOs). The Council invites the Commission to continue its work on the criteria

and modalities for taking into account the resulting implicit government liabilities

in the definition of MTOs, to be discussed early in 2008. The next round of long-

term projections in the course of 2009 presents an opportunity to put these ar-

rangements into place. The agreement should be reached in time to give Member

States the opportunity to present their MTOs in the updates of the SCPs to be

submitted in the autumn of 2009 in line with the Pact, which provides for a revi-

sion of the MTOs every four years.

To improve fiscal surveillance, the Commission is invited to develop its regular

assessment of national fiscal policies by a more comprehensive analysis of the

overall macroeconomic situation, including the building up of macroeconomic

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imbalances and their interaction with fiscal positions. The Commission should

pursue its work to improve the tools for measuring the underlying fiscal position

of Member States, notably with a view to avoid pro-cyclical fiscal policies in good

times. Moreover, the SCPs should specify how medium-term budgetary objectives

will be met, including the extent to which further measures are required to fill the

gap between the medium-term targets and fiscal trends under existing and already

implemented policies. "

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Rådskonklusioner vedr. kvaliteten af de offentlige finanser – modernisering af

den offentlige sektor:

"The Council discussed Member States' experiences of modernising public admin-

istrations in the context of the quality of public finances. All Member States ar e

undertaking initiatives to reform their public administration with a view to im-

proving efficiency and effectiveness, and various approaches have been developed

in line with national needs. This is illustrated in the report presented by the Eco-

nomic Policy Committee and the Commission. These initiatives have been under-

taken in four main areas: a greater performance orientation of public budgets, a

re-organisation of public administrations, reforms in human resource manage-

ment and improved use of ICT tools.

Ministers underlined that the modernisation of public administration can play an

important role in enhancing competitiveness, delivering better services, achieving

better value for money and ensuring the control of government expenditure. Pub-

lic administration reforms can thereby contribute to meet the objectives of both

the Lisbon Strategy and the Stability and Growth Pact and Ministers of Finance

can play a leading role in modernising public administration. Reforms should

therefore be subject to a regular analysis and exchange of best practices in particu-

lar in the context of the Lisbon National Reform Programmes in line with nation-

al priorities.

In this context, the Council considers that national systems to measure efficiency

and evaluate reforms in the public sector need to be improved. It invites the EPC

and the Commission to step up their efforts to improve the analysis, methodology

and the measurement of the quality of public finances, including the efficiency

and effectiveness of public expenditures and revenue structures, as well as of ma-

jor public sector reforms. Ministers also re-iterated their June 2007 request for

Member States to step up efforts in the provision and subsequent analysis of

COFOG, level II data. The Council will come back to the issue of public spend-

ing efficiency and effectiveness, in particular related to specific spending catego-

ries such as social spending, education and R&D, in Spring 2008."

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Rådskonklusioner vedr. bedre regulering:

"Following the launch of the Commission’s exercise to measure administrative

costs associated with EU rules and the March 2007 European Council’s agree-

ment to reduce the administrative burden arising from EU legislation by 25% by

2012, and the invitation to Member States to set their own national targets of

comparable ambition within their spheres of competence by 2008, the Council

(ECOFIN) discussed the progress that has been made to date and the future ac-

tions required.

Reducing the burdens of EU legislation requires a strong joint effort by the EU

Institutions and Member States. The Council therefore welcomes that since its

consideration of Member States’ specific experiences of administrative burdens in

October 2006, several Member States are now actively seeking ways to reduce

national burdens, including through measuring burdens. A number of countries

have adopted concrete national reduction targets of comparable ambition to the

European-level target. The Council also recalls the European Council’s invitation

to complete all the fast track actions by the end of 2007. It invites the Commis-

sion to communicate to Member States the method and criteria used to identify

priority actions and fast-track procedures.

The Council emphasizes that a substantial reduction in administrative burdens

should enable companies to raise their productivity levels. In this respect, the

Council:



welcomes the progress made both at Member States and EU level towards

reducing administrative burdens in the EU, including through measurement,

as part of the wider better regulation agenda and the Lisbon Strategy for

Growth and Jobs;

encourages the Member States that have not yet done so to set their own

national targets of comparable ambition to the European-level target within

their spheres of competence by 2008, taking into account the different

starting points and traditions, in line with the invitation of the 2007

European Council;

encourages the Commission to present proposals in order to reduce

administrative burdens at EU level, while safeguarding the wider objectives

and benefits of legislation and regulation, in parallel with the measurement

exercise and in line with the Action Plan for Reducing Administrative

Burdens in the EU and to develop the impact analysis of the reduction of

administrative burdens.

calls on the Commission to ensure that the needs of SMEs and newly

created enterprises, on which regulation and administrative burden may



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weigh disproportionately heavily, are fully considered in the context of the

better regulation agenda and the reduction of administrative burdens;



invites the Commission, in consultation with the Member States, the

European Parliament and all other relevant stakeholders, in the context of

the forthcoming Strategic Review of Better Regulation in early 2008, to

review how the existing better regulation tools, including the analysis of

administrative costs in impact assessments, are effectively applied in

practice across the board by the Commission, Council and Member States

to new proposals and existing legislation, especially those which are relevant

to the internal market, and whether there could be scope for further

improvements in their quality.

The Council (Ecofin) will consider the specific issue of statistical burdens in No-

vember on the basis of the report by the Commission. It will consider the further

progress made on all aspects of better regulation in early 2008 ahead of the Spring

European Council, drawing upon the Strategic Review of Better Regulation which

will include an overview of the adopted and planned reduction measures."

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Rådskonklusioner vedr. Flexicurity – økonomiske aspekter:

"1.

The rapidly changing global economy, structural change and ageing pop-

ulations present both opportunities and challenges for the European

economies. Policy makers need to find the right responses to achieve

both flexibility and security, which in the right policy environment can

be mutually reinforcing and can become a useful tool to increase a coun-

try’s international competitiveness.

Within the context of the renewed Lisbon Strategy for Growth and Jobs,

the flexicurity approach shows that the European social models can be

successfully modernised. The Council welcomes the Communication

from the Commission "Towards Common Principles of Flexicurity".

The flexicurity approach provides a good platform to develop compre-

hensive strategies that enhance overall labour market flexibility and sup-

port workers’ mobility, while also enhancing workers' security through

the promotion of job creation, comprehensive lifelong learning strate-

gies, assistance in transitions, and adequate support by social systems.

Higher employment and better opportunities for all can be delivered

together with flexibility and security. An appropriate degree of flexibility

can contribute to employment creation. The best way to maximise the

benefits and the opportunities from globalisation is to equip people with

the means to manage and take advantage of change. Labour markets and

modern social security and educational systems that allow all to partici-

pate and progress are at the core of such an approach based on ‘social

bridges’. The responsibility for measures needed to increase employabil-

ity lies with governments, social partners and individuals. Active labour

market policies, particularly for the most disadvantaged, which aim to

improve job creation and people’s employability, upgrade and update

their skills, and provide active help with job search may, when efficiently

designed, help to increase employment and sustainable economic

growth, and form an important part of flexicurity.

Some measures associated with flexicurity have substantial budgetary

costs. However, high flexicurity-related expenditure does not in itself au-

tomatically lead to more effective outcomes. Flexicurity can and should

go hand in hand with sound public finances. These complementing ob-

jectives should be pursued by focusing on improving results, while con-

taining overall expenditure levels. Flexicurity strategies should therefore

take into account the trade-offs and complementaries between different

public spending priorities, the cost effectiveness and efficiency of the

proposed measures, and the budgetary pressures associated with ageing

populations. In particular in the context of demographic change, policy-

makers need to pay attention to safeguarding the long-term sustainability

of public finances. Finally, successful and socially-inclusive labour mar-

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kets are built on a comprehensive set of policies, including those that go

beyond the labour market such as ensuring macroeconomic stability and

growth, flexible goods, services and capital markets, increasing the effi-

ciency and effectiveness of public spending and an appropriate business

environment.

There is no single model of flexicurity that can be exported to all Mem-

ber States. The establishment of a set of common principles and the

identification of best practices on flexicurity should help each Member

State to set its own tailored priorities for developing employment and

social policies taking into account their initial conditions, their own tradi-

tions and institutional set-up.

Such policies need to be developed in the context of making work pay,

by taking into account that tax structures and interactions with different

benefit systems have an impact on the labour market and labour supply.

Flexicurity strategies should aim at a system of integrated active and pas-

sive policies that enhance employment chances and improve incentives

to work in order to avoid creating unemployment and inactivity traps,

especially for the working poor, while at the same time enabling an effi-

cient allocation of labour. When developing such policies, all economic

agents, both public and private, should be actively involved.

Also, the national evaluation of flexicurity strategies has to be developed,

based upon comprehensive and more comparable data on costs and

benefits. More systematic and independent evaluation of policies at na-

tional level could help to strengthen the cost-effectiveness and efficiency

of flexicurity strategies as well as identify which policies should be

phased out.

The Council:



welcomes the approach of the Commission Communication promoting

integrated policies to enhance both labour market flexibility and

employment security as well as social inclusion while respecting the very

different situations in Member States, and notes that flexibility and security

can be mutually reinforcing in the right policy environment.

considers that other factors outside the labour market, notably educational

systems, macroeconomic stability and growth, reforms in goods, services

and capital markets, and an appropriate business environment are also key

for creating appropriate conditions for successful social policy reforms.

considers that the implementation of flexicurity strategies must remain fully

compatible with sound and financially sustainable budgetary policies and

complementary spending priorities. Great attention should be paid to the

cost-effectiveness of measures.



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

takes note that integrated reform efforts have better overall effects. When

implementing flexicurity strategies policy makers should avoid creating

disincentive effects and long-term welfare dependence, by creating

appropriate overall work incentives and making work pay.

invites the EPC and the Commission to closely follow the implementation

of flexicurity strategies within the framework of the Growth and Jobs

strategy, in particular by monitoring its budgetary impact and deepening the

analysis of the cost-effectiveness and efficiency of measures in the context

of the flexicurity strategy of each country as a whole."



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Rådskonklusioner vedr. clearing og afvikling:

"The reality of a single European securities market is not compatible with a frag-

mented European post-trading sector. Achieving competitive, efficient and safe

pan-European post trading arrangements is becoming more and more critical.

Efforts have been made to achieve greater efficiency, integration and safety in

post-trading arrangements in the EU, both by the private and public sectors,

namely by means of: (i) the industry Code of Conduct for clearing and settlement

signed in November 2006; (ii) the European Central Bank's initiative to set up

TARGET2-Securities; (iii) the work on dismantling the fiscal and legal barriers to

securities market integration (Giovannini barriers); and (iv) the efforts of the Eu-

ropean System of Central Banks (ESCB) and the Committee of European Securi-

ties Regulators (CESR) to promote the safety and soundness of European post-

trading arrangements such as by means of standards.

In November last year, the ECOFIN Council agreed to carry out a set of strategic

discussions in autumn 2007 and spring 2008 to review the state of play of the

aforementioned initiatives, with a view to considering further policy action neces-

sary so as to ensure progress in all key areas.

On the basis of the report presented in July by the European Commission – “Im-

proving the Efficiency, Integration, and Safety and Soundness of Cross-border

Post-trading Arrangements in Europe” – and following the exchange of views at

the Informal ECOFIN meeting in Porto, the Council:

AGREES that the continuous fragmentation of the European securities

post-trading sector leads to unnecessarily high costs, especially for cross-

border securities transactions in the EU, which constitutes a considerable

competitive disadvantage for European capital markets.

WELCOMES the progress already achieved in certain key areas while

stressing the need for further substantial progress.

With regard to the implementation of the Code of Conduct, the Council:

WELCOMES the entry into force of the areas relating to price transpar-

ency and to access and interoperability segments, and the positive results

achieved so far, and emphasises that more progress is needed on price

comparability.

LOOKS FORWARD to the entry into force of the third area of the Code

– service unbundling and accounting separation by the end of 2007 – and

stresses the need to continue monitoring closely the implementation of

the Code of Conduct.

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In respect of TARGET2-Securities, the Council:

WELCOMES the fact that the ECB is proceeding along the lines of the

Council conclusions of February 2007 and conducting a public consulta-

tion process on the general principles, nature and scope of TARGET2-

Securities. Further decisions on the development phase can be expected in

spring 2008 and ECOFIN Ministers will be kept informed before any fur-

ther decisions are taken.

Concerning the removal of legal and fiscal barriers identified in the “Giovannini

Report”, the Council:

AGREES that their removal is a key priority and considers that concrete

actions and a timeframe should be proposed promptly by the Commission

on the basis of the work of the advisory groups taking into account the

views and responsibilities of the Member States; and the Financial Services

Committee is INVITED to provide guidance to ensure progress and to

monitor development.

As to the work on ESCB/CESR “Standards for Securities Clearing and Settle-

ment in the EU”, the Council:

RECOGNISES that the investor protection and prudential safety of the

post-trading sector, including its risk-management aspects, are important

issues to be discussed and that concrete action, including for example by

agreeing on the standards or regulatory measures, should be considered as

a complement for the Code of Conduct on risks and financial stability.

REQUIRES the FSC to deepen its work on the scope, legal basis and

contents of the standards giving due consideration to the importance of

ensuring a level playing field; and together with the Commission propose

ways forward on this subject to be submitted to the Council in early spring

2008.

The various ongoing initiatives should proceed in a coherent manner, not in isola-

tion. All the measures mentioned above, if implemented well, will contribute to

the creation of a far more efficient European securities market infrastructure."

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Rådskonklusioner vedr. finansiel stabilitet i EU (Kriseberedskab):

"Following the work priorities established by the ECOFIN Council of October

2006 and the discussion at the informal meeting of EU Finance Ministers and

Central Bank Governors in Porto in September 2007, the Council AGREED to

take further steps, at the EU and national level, to develop the arrangements for

cross-border financial stability within the EU. These steps are based on recom-

mendations from the Economic and Financial Committee and take into account

the state of financial integration in the EU and existing stability arrangements. The

Council AGREES that further actions should be taken to ensure that arrange-

ments for financial stability are in line with evolving financial markets and that the

EU obtains the full benefits of financial integration. In particular, the Council

RECOGNISES that:

integration contributes positively to overall performance of the EU finan-

cial sector and promotes financial stability; in this context, the number of

large cross-border banking groups has substantially increased, which im-

proves the efficiency of financial services, including for businesses and

consumers across the EU;

the EU framework for prudential supervision and crisis management and

resolution must allow a quick response to cross-border systemic financial

crises and their implications;

financial stability in the EU is a common concern for all Member States

and must be safeguarded on the basis of close co-operation; and

preparation in advance is necessary for an effective safeguarding of finan-

cial stability across borders, while allowing for flexibility to deal with spe-

cific circumstances.

AGREES on common principles that will be the basis for co-operation among

national authorities in preserving financial stability within the EU. These princi-

ples, set out in Annex I, should be respected in the management of any cross-

border financial crisis with potential systemic implications. They constitute a con-

sistent and sound basis for responding to any financial crisis situations in the EU,

specifying the overarching considerations for cross-border cooperation, taking

into account that quick actions may be needed to safeguard financial stability.

INVITES, in order to enhance procedures for co-operation and preparedness of

authorities in the EU, the Economic and Financial Committee to prepare for

spring 2008, an extended Memorandum of Understanding (MoU) that will build

on the EU MoU signed in 2005 between Heads of Competent Banking Supervi-

sory Authorities, Central Banks Governors and Finance Ministers in the EU. The

new MoU will include:

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the common principles;

a common analytical framework for the assessment of systemic implica-

tions of a potential crisis to ensure the use of common terminology in as-

sessing the systemic implications of a cross-border financial crisis by all

relevant authorities; and to enhance the availability of timely assessments

among authorities that will facilitate the decision-making in a crisis situa-

tion. The EU Central Banks, Supervisory Authorities and Finance Minis-

tries are INVITED to use this framework by the end of 2008; and

common practical guidelines for crisis management to reflect a common

understanding of the steps and procedures that need to be taken in a

cross-border crisis situation.

ENCOURAGES authorities in different Member States that share financial stabil-

ity concerns to start developing, as soon as possible, voluntary cooperation

agreements consistent with the extended EU wide MoU and building on cross-

border supervisory arrangements for crisis prevention. These agreements would

focus on the principles and procedures in detail - taking into account particular

needs of crisis management in a specific cross-border context. To facilitate the

conclusion of these agreements, the Council INVITES the Economic and Finan-

cial Committee to develop concrete examples by spring 2008.

WELCOMES the progress made by the EU Member States with their national

arrangements for financial stability, in particular that

Domestic Standing Groups

have

been put in place in most EU Member States. These groups bring together com-

petent Supervisory Authorities, the National Central Banks and the representa-

tives from relevant Ministries within a Member State for stability and crisis man-

agement purposes to enhance preparedness of authorities through the exchange

of information, development of tools and also by conducting crisis simulation

exercises. The Council INVITES all Member States to develop such Domestic

Standing Groups.

RECOGNISES the need to facilitate cooperation and information exchange

among authorities; and the need to enhance the availability of the tools that are

necessary to preserve financial stability in Member States and to ensure their func-

tioning across-border between relevant parties. To this end, the Commission is

INVITED, in close co-operation with Member States, to examine possible en-

hancements, and where necessary propose regulatory changes as follows to:

clarify the nature and extent of the legal obligations for Supervisory Au-

thorities Central Banks and Finance Ministries to exchange information

and to cooperate and in this context: increase information rights and

in-

volvement of host countries;

clarify the role of

consolidating supervisors

and facili-

tate the timely involvement of relevant parties in a crisis situation; and

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consider including in the

mandates of national supervisors,

a task to cooperate

within the EU and to take into account the financial stability concerns in

all Member States;

analyse the feasibility of reducing barriers to cross-border transfer of as-

sets while defining appropriate safeguards for entities transferring the as-

sets; and analyse the feasibility of revising rules for the winding-up of

banking groups to include joint

insolvency proceedings

for cross-border groups

while providing sufficient safeguards to all stakeholders of the group or its

part being reorganised or wound-up; and

improve interoperability of

Deposit Guarantee Schemes (DGS),

by removing

the inconveniences in the current arrangements, and clarify the practical

implications of DGS to absorb and share any financial burdens.

INVITES the Commission, without prejudice to its assessment on a case by case

basis and respecting Commission competences, working together with Member

States, to endeavour to clarify when a major banking crisis could be considered by

the Commission such as to provoke a 'serious disturbance of the economy' within

the meaning of Article 87(3)(b) of the EC Treaty and state aid rules; and IN-

VITES the Commission to consider streamlining procedures focusing on how

state aid enquiries under such critical circumstances can be treated rapidly.

INVITES the Economic and Financial Committee and the Financial Services

Committee to monitor and report regularly to EU Finance Ministers on the pro-

gress in all the above areas, as reflected in a strategic roadmap presented in annex

2. The EFC will test all the elements to be introduced in an EU wide crisis simula-

tion exercise in spring 2009 and report to ECOFIN Ministers on its conclusions

in autumn 2009.

LOOKS FORWARD to the enhancement of the Lamfalussy framework in the

context of its forthcoming review in December 2007, on the basis of the reports

by the Inter-Institutional Monitoring Committee, the Commission and the Finan-

cial Services Committee, including on financial supervision in the EU. In this con-

text, the above conclusions will be taken into account so as to ensure coherence

between the arrangements for crisis prevention and crisis management.

____________

Annex I: Common Principles for cross-border financial crisis management

Member States agree on a set of common principles to be followed in the man-

agement of any cross-border financial crisis, which involves at least one banking

group which (i) has substantial cross-border activities and (ii) is facing severe

problems which are expected to trigger systemic effects in at least one Member

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State; and (iii) is assessed to be at risk of becoming insolvent. The common prin-

ciples are the following:

The objective of crisis management is to protect the stability of the finan-

cial system in all countries involved and in the EU as a whole and to min-

imise potential harmful economic impacts at the lowest overall collective

cost. The objective is not to prevent bank failures.

In a crisis situation, primacy will always be given to private sector solu-

tions which as far as possible will build on the financial situation of a

banking group as a whole. The management of an ailing institution will be

held accountable, shareholders will not be bailed out and creditors and un-

insured depositors should expect to face losses.

The use of public money to resolve a crisis can never be taken for granted

and will only be considered to remedy a serious disturbance in the econ-

omy and when overall social benefits are assessed to exceed the cost of re-

capitalisation at public expense. The circumstances and the timing of a

possible public intervention can not be set in advance. Strict and uniform

conditions shall be applied to any use of public money.

Managing a cross-border crisis is a matter of common interest for all

Member States affected. Where a bank group has significant cross-border

activities in different Member States, authorities in these countries will

carefully cooperate and prepare in normal times as much as possible for

sharing a potential fiscal burden. If public resources are involved, direct

budgetary net costs are shared among affected Member States on the basis

of equitable and balanced criteria, which take into account the economic

impact of the crisis in the countries affected and the framework of home

and host countries’ supervisory powers.

Arrangements and tools for cross-border crisis management will be de-

signed flexibly to allow for adapting to the specific features of a crisis, in-

dividual institutions, balance sheet items and markets. Cross-border ar-

rangements will build on effective national arrangements and cooperation

between authorities of different countries. Competent authorities in the

Member States affected by a crisis should be in a position to promptly as-

sess the systemic nature of the crisis and its cross-border implications

based on common terminology and a common analytical framework.

Arrangements for crisis management and crisis resolution will be con-

sistent with the arrangements for supervision and crisis prevention. This

consistency particularly refers to the division of responsibilities between

authorities and the coordinating role of home country supervisory authori-

ties.

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Full participation in management and resolution of a crisis will be ensured

at an early stage for those Member States that may be affected through in-

dividual institutions or infrastructures, taking into account that quick ac-

tions may be needed to solve the crisis.

Policy actions in the context of crisis management will preserve a level

playing field. Especially, any public intervention must comply with EU

competition and state-aid rules.

The global dimension will be taken into account in financial stability ar-

rangements whenever necessary. Authorities from third countries will be

involved where appropriate.

____________

Annex II: Strategic Roadmap for strengthening EU arrangements for fi-

nancial stability

1. Procedures and principles to enhance co-operation and preparedness

October 2007: adoption by EU Finance Ministers and Central Banks

Governors of common principles for cross-border crisis management

with the objective to have the common basis for financial crisis manage-

ment between relevant authorities in the EU.

End 2007: Member States to decide whether to include an EU-dimension

in the national mandates of supervisory authorities, i.e. a requirement to

cooperate and to take into account financial stability concerns in all Mem-

ber States (to be recalled in the context of the 'Lamfalussy' review).

Member States are encouraged to develop and sign specific 'voluntary co-

operation agreements' between authorities in different Members States as

soon as possible; and the Economic and Financial Committee will provide

examples of such agreements by the spring 2008.

Spring 2008: EU Supervisory Authorities, Finance Ministries and Central

Banks to sign an extended EU wide MoU, which will be built on the 2005

MoU and will include common principles on crisis management including

on the sharing of fiscal burden; and a common analytical framework. An

annex will include practical guidelines for crisis management.

End of 2008: authorities in Member States will use the common analytical

framework for assessing a cross-border financial crisis.

2007-2009: the Commission to propose ways to clarify cooperation obli-

gations including possible amendments to EU-banking legislation, espe-

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cially to: clarify the existing obligations for Supervisory Authorities, Cen-

tral Banks and Finance Ministers to exchange information and to cooper-

ate in a crisis situation; increase the information rights and involvement

of host countries; clarify the role of the consolidating supervisors and fa-

cilitate the timely involvement of relevant parties in a crisis situation; and

examine whether, to this end, legislative changes are necessary, including

to reinforce the legal requirements for supervisory collaboration and in-

formation sharing. Progress report by the Commission to the EFC by the

end of 2007. Commission proposal end 2008; and adoption by

EP/Council by the end of 2009.

2009: the Economic and Financial Committee to conduct an EU wide

crisis simulation exercise in spring 2009 to test the proposed arrangements

and to report to ECOFIN Ministers on its conclusions in autumn 2009.

2. Review the tools for crisis prevention, management and resolution

2008: the Financial Services Committee and the Commission to identify

specific obstacles to use of the tools in cross-border situations and pro-

pose changes, to ensure the availability of relevant tools at the national

level and the functionality of tools for crisis management and resolution

taking into account the cross-border dimension.

2008: the Commission and Member States shall work towards clarifying

when a banking crisis could be considered by the Commission as “a

serious

disturbance for the economy”

(under the Treaty and State aid rules) and the

Commission to consider streamlining procedures focusing on how State

aid enquiries under critical circumstances can be treated rapidly.

2007-2009: the Commission to assess the possible extension of the scope

of the present EU-Directive on winding up of credit institutions to in-

clude insolvent subsidiaries with the objective to increase the efficiency,

the optimal reorganisation and winding up of cross border banking groups

taking due consideration of the interests of all stakeholders concerned.

The Commission to launch a public consultation October 2007; legal

study of obstacles mid 2008; and release a Commission Green Paper by

end 2008.

2007-2009: work started in spring 2007 to be continued by the Commis-

sion with the objective to clarify EU Deposit Guarantee Schemes Di-

rective, especially: practical agreement and clarification of the scope of the

Directive and tasks of DGS, 'topping-up', information exchange between

schemes, reducing pay-out delays and improving depositor information.

Deposit Guarantee Schemes and relevant authorities in Member States

will be involved. Final results are expected by March 2009.

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2007-2009: alongside the review of the winding up Directive followed by

Commission proposal mid-2009, the Commission to perform a feasibility

study on reducing barriers for cross-border asset transferability while in-

troducing appropriate safeguards within banking, insolvency and company

law, taking into account that the reallocation of assets in a crisis affects the

ability of stakeholders in different legal entities to pursue claims. The

overall objective is to reinforce the primacy of private solutions, avoid

counter-productive ring-fencing of assets, and facilitate a smooth man-

agement of a crisis."