EU to quicken pace of economic reform, say officials
Talks to reform the way the EU can reduce its debt problems and supervise financial institutions have been moved forward to catch up with a faster reform process in the US, say sources.
Background
After the outbreak of the Greek debt crisis, EU finance ministers agreed in May to establish a rescue mechanism worth €750 billion to protect the euro from collapsing under the weight of debt accumulated by EU countries (EurActiv 10/05/10).
On 12 May, the European Commission presented its first proposals to strengthen the Stability and Growth Pact, which guarantees the financial stability of the euro zone and the EU as a whole (EurActiv 12/05/10).
At a summit in June, EU leaders broadly endorsed the Commission's suggestions, paving the way for more detailed proposals which were presented on 30 June.
Officials reveal that a delegation of policymakers rewriting how the bloc manages its debt problems will be working to a tighter schedule than previously imagined. Their comments come in the wake of criticism that the EU has been beaten by a quicker reform process in the US.
In informal discussions last month, the EU's permanent president, Herman van Rompuy, allegedly asked policymakers to step up their efforts to get the bloc's nascent financial and economic reforms passed by member states as early as October.
Originally, Van Rompuy had set the end of this year as an informal deadline, but officials say the EU president has been feeling the heat from reform taking place across the Atlantic.
The president chairs a delegation of policymakers dedicated to shaping economic reform, namely the Taskforce on Economic Governance.
According to the new schedule, officials' talks to smooth out disagreements on the supervision of banks will commence on 30 August and continue on 2 September.
A vote on the creation of new bodies to supervise banks will be taken by members of the European Parliament in the last week of September at their plenary session (EurActiv 07/07/10).
In addition, EU finance ministers will meet on 6-7 September to discuss new ways to monitor and shape economic policy, with national leaders due to discuss the final touches on 16 September.
Yesterday, the European Commission proposed to give national supervisors greater oversight of financial conglomerates and holding companies to make sure that they cannot use regulatory loopholes to evade the same supervision rules of smaller national entities.
US leapfrogging EU
In early July, the US passed a 2,400-page financial reform bill, the Dodd-Frank Bill. Meanwhile, the EU is still locked in negotiations over the shape of its financial and economic reforms, with results promised to emerge during September.
Yesterday (16 August) officials rejected criticism that the pace of EU reform had been too sluggish, arguing that widespread reform of the bloc's fiscal policy and financial sector would need time before yielding the desired long-term results.
"On the contrary, we are going amazingly fast and we are doing things that previously would have taken years," Amadeu Altafaj Tardio, spokesperson on economic reform at the European Commission, told EurActiv.
Altafaj was speaking about efforts to rewrite how the bloc monitors its debt problems, namely the Stability and Growth Pact, which is also currently being reformed by Van Rompuy's task force.
The Commission's fully fledged proposal on reforming macroeconomic surveillance is due at the end of September, Altafaj said.
Jürgen Stark, a member of the European Central Bank's executive board, rejected criticism that euro-area reforms were "in a state of paralysis".
"We will see an enhancement of fiscal surveillance, a more stringent implementation of multilateral surveillance to correct excessive deficits and debt, and better instruments for the prevention and resolution of crises," Stark wrote in a Financial Times editorial yesterday.
Stark came out in favour of the EU's slower pace of financial reform, arguing that one-time fiscal adjustments would yield less economic growth than bigger structural reforms of a country's fiscal policy.
"Tax systems are being adjusted and the structure and level of expenditure is being made more conducive to growth," Stark continued.
However, observers remain unconvinced that the EU is capable of stepping up its reform efforts.
"The 27-member EU's voting mechanisms are much too sluggish and slow and are subject to too many different interests," commentator Wolfgang Reuter wrote in German magazine Der Spiegel, labelling the bloc reform process too sluggish.
"While the Americans are intervening in the business models of their financial firms, politicians in Brussels have spent the last few weeks arguing over what powers to give a planned European banking supervision authority," Reuter continued.
Next Steps
- 30 August: Trialogues on financial supervision to restart.
- 6 Sept.: EU finance ministers to convene in Brussels for two-day meeting.
- 16 Sept.: EU leaders to meet to discuss reform of economic surveillance.
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