British MPs warn EU not to rush financial reform
ANDREW WILLIS
16.11.2009 @ 09:32 CET
The EU is pushing ahead too fast with plans to reform its financial architecture, warns a report by the UK's treasury select committee published on Monday (16 November).
The Swedish EU presidency hopes finance ministers meeting on 2 December will back amended European Commission proposals that were published in September, with the European Parliament's approval also needed.
UK houses of parliament (Photo: wikipedia)
The proposals – part of the EU's response to the financial crisis – envisage a new European Systemic Risk Board to monitor for macroeconomic dangers such as the build up of bubbles, and three new supervisory authorities for banking, insurance and securities.
The MPs support the plans in general but say more time is needed to get them exactly right.
"The proposals will set in place a framework which should last for many decades, and there should be proper time for consideration, otherwise, this could end up as a recipe for a muddle," treasury committee chairman John McFall said.
Mr McFall argues that while undue delay should be prevented to stop banks returning to a "business as normal" mentality, fears that the political appetite for reform will fade are misplaced.
Changes needed
In the committee report, MPs highlight a list of areas that need tweaking, and urge the UK government to veto any agreement until the necessary changes are made.
These should include more safeguards to address fiscal sovereignty concerns, so that governments are not forced to spend taxpayers money against their will, for example through a bank bail-out.
The committee report also expresses concern over proposed commission powers to unilaterally declare an emergency, a measure that would confer greater powers on the three authorities to intervene in financial institutions.
Agreeing with a recent announcement by the UK financial-services secretary, Paul Myners, the MPs say the EU's executive body isn't the right organisation to make this decision.
They also argue the need for a permanent non-eurozone member on the new risk board's steering committee, and call for the legal basis for the three authorities to be cleared up.
"It may be that these issues can be resolved by 2 December," say the UK lawmakers in the report.
"However, we think it highly unlikely this will happen and we urge member states to consider a more measured and realistic timetable for reform of the European supervisory and regulatory system."
As well as being Europe's financial centre, the City of London accounts for a disproportionate percentage of the UK's GDP, with officials therefore keen that new EU rules do not overly stifle the sector.
