EU agrees roadmap to avert future financial turmoil[fr][de] 

EU finance ministers meeting in Luxembourg on 9 October agreed a 15 month 'roadmap' to examine whether financial rules need to be changed in order to improve the way cross-border banking crises are handled in the future and avoid a repeat of this summer's market turmoil. 

The programme focuses on four aspects:

• enhancing transparency, especially relating to complex financial instruments, notably by looking into banks' mandatory disclosure rules;
• improving the way investments are valued, by agreeing on common standards;
• reinforcing supervisory mechanisms, through better information-sharing between national authorities and the development of cross-border cooperation agreements, and; 
• improving market functioning, with a particular focus on credit rating agencies, which are accused of potential conflicts of interest, because they are paid as consultants by the very banks whose debt they rate. The issue is also likely to be raised at a meeting of the G7 major industrialised nations on the situation of global financial markets on 19-22 October. 

EU ministers also called for a common framework for defining whether a banking crisis should be considered as "a serious disturbance for the economy" and invited the Commission to give fast-track treatment to reviews of whether government bailouts constitute illegal state aid so as to limit the broader impact. 

Portuguese Finance Minister Fernando Teixeira Dos Santos said it was still hard for the ministers to see how far the ripples from the US subprime crisis would spread. "It's very difficult to estimate its impact. It depends on how long current circumstances will last…The longer they last, the more turbulence there is." 

EU Internal Market Commissioner Charlie McCreevy stressed: "The recent market turmoil has thrown the spotlight clearly on the need to ensure cooperation and coordination between supervisory authorities." 

EU Monetary Affairs Commissioner Joaquín Almunia said: "I hope we will be able to increase confidence, because confidence is absolutely necessary for the continuation of the recovery and to avoid the transmission of the turmoil to the real economy." 

French Finance Minister Christine Lagarde blamed lack of transparency and a poor or even biased assessment of risk by credit agencies for the crisis and suggested that Europe may need to supervise rating agencies itself, since they currently face oversight only by the US Securities and Exchange Commission. 

"Assessing the risks of complex assets has become challenging and responsibilities for doing that are fragmented. We should prevent a situation whereby incentives have biased consequences and market agents can be irresponsible," she wrote in a letter to the Financial Times. 

European Central Bank President Jean-Claude Trichet said that the small number of international rating agencies poses a problem: "We have only a few of them at global level which is a problem for global finance," adding: "An assessment of the role played by rating agencies needs to be undertaken."