Business groups and civil society relished the chance to grill the EU's new internal market commissioner, French politician Michel Barnier, at an event in Paris organised by EURACTIV France. Barnier made clear that he was not a fan of self-regulation.
"Barroso has given me a mandate to clean up the internal market and close its missing links," Barnier told a 400-strong crowd from European businesses, federations, NGOs and the media on Wednesday (17 March).
Though the commissioner at times evaded offering concrete details of upcoming policies, he insisted he was a strong advocate of more stringent financial supervision in the EU.
The Frenchman also reiterated that EU regulation would follow the same roadmap adopted by world leaders at last year's G20 summit on international financial regulation in Pittsburgh (EURACTIV 07/09/09)
Hedge funds will have no shortcuts
Barnier defended hotly-contested draft rules on hedge funds and private equity that would grant an EU passport of unrestricted access to investors across the 27-member bloc.
"We will have extremely strict rules. You can count on me: there will be no shortcuts," the commissioner said in response to criticism from Yann Algan, a professor of economics at Sciences Po university.
The commissioner was confident that derailed talks on the draft rules would resume soon and that an agreement could be struck before the end of July.
Talks in Brussels to reach an agreement on the Alternative Investment Fund Managers Directive (AIFMD) were postponed due to the UK's resistance to the draft laws (EURACTIV 17/03/10).
Barnier reminded his audience that as co-legislator, the European Parliament would now be entering a series of trilateral talks with member states (in the Council of Ministers) and the European Commission on the regulation.
The vote in the Parliament's economic and monetary affairs committee, initially scheduled for 12 April, will also be postponed for one to two weeks.
"In terms of growth, I wonder if we are not sidelining reforms of poorly-regulated banking mechanisms, forgetting that they were behind the financial crisis," Daniel Lebègue, president of Transparency International France, asked the commissioner.
Barnier said the Commission was readying a proposal to regulate derivatives – instruments that get their value from underlying assets – which will be unveiled in June.
Derivatives would likely be pushed onto exchanges for greater transparency, the commissioner added.
"If current financial regulation only aims for stability, we may have difficulties creating investment and growth," Claude Fischer from Confrontations Europe, think-tank, told the commissioner.
"What makes for good European regulation? Must we give preference to long-term investment?" he asked.
Barnier said he would try to strike the right balance on financial regulation, and specifically the Solvency II directive for insurers, which has been criticised for disadvantaging small business.
The directive suggests that the greater the economic risk an insurer takes, the more capital the company would have to hold as a guarantee against default.
Member states agreed on a compromise for Solvency II in April last year and the proposed rules recently passed a stress test at Europe's insurance companies (EURACTIV 18/03/10)
‘‘I have two priorities: assuring that SMEs re-entering the market are not penalised and giving preference to long-term investments," Barnier added.
European Monetary Fund
France has been particularly cautious about German plans to create a European Monetary Fund which, among other punishments, would kick economies beyond repair out of the euro zone (EURACTIV 18/03/10).
The commissioner was no different and insisted that Europe should use the existing tools at its disposal to consolidate budget deficits.
"The Greek crisis has shown that we need more budgetary consolidation and to pool our resources in other sectors, so that a stronger Europe can contribute to a more just and secure world," Barnier said.