On Monday, December 7, Swedish Minister for Finance Anders Borg visited the Economic and Monetary Affairs Committee in the European Parliament for an exchange of views about the achievements of the Swedish Presidency in the ECOFIN Council

Anders Borg, who has chaired the ECOFIN Council during the Swedish Presidency, highlighted the progress made this autumn in addressing the diverse set of challenges facing the EU.

”I am very satisfied with what we have achieved since July, particularly in terms of financial supervision and crisis management as well as financial market and fiscal exit strategies. These are complex issues, but thanks to a spirit of compromise and political will from Member States, we have been able to move forward.”

A new European financial supervisory architecture

A new European financial supervisory architecture has been agreed in the Council. One part is the creation of a European Systemic Risk Board, responsible for monitoring macro-economic risks and issuing risk warnings and recommendations. The other is the creation of three new micro-supervisory authorities for banks, insurance and securities markets, whose role is to develop common technical standards and ensure the consistent and coherent application of Community law. The aim of the new supervisory framework is to create the institutional infrastructure needed to underpin financial stability in Europe.

On the topic of crisis management, work on creating a strengthened and more suitable coordination framework among relevant authorities and improving the regulatory tools for early intervention in ailing banks has continued.

Tougher regulation of banks and bonuses

With the Capital Requirements Directive, capital requirements for certain banking activities will be increased for credit institutions and investment firms. Moreover, the Directive requires remuneration policies to be consistent with long-term value creation and sound and effective risk management. Guaranteed bonuses will in principle be prohibited and a substantial portion of a bonus shall be deferred for an appropriate period.

Principles for fiscal exit

To reinforce confidence in public finances, in a context of increasing deficits and debt levels, the Presidency has also prioritised the development of a fiscal exit strategy. Principles for such a strategy were agreed at the Göteborg informal ECOFIN meeting and included the following elements: a timely withdrawal of the extraordinary measures; further structural fiscal consolidation well beyond 0.5 per cent of GDP per year; comprehensive structural reforms aimed at strengthening structural employment and potential growth, including labour market reforms and long term investments; and strengthened national budgetary frameworks.