Apr 07 2008 Martin Coyle
European regulators are poised to work more closely together to deal with cross-border financial crises. The move follows this weekend's meeting of European finance ministers in Brdo, Slovenia. The meeting heard that the credit crisis would continue until the end of 2009 and required a coordinated response from regional governments and banks.
Speaking at the meeting Charlie McCreevy, internal markets commissioner, said that Europe would not have been prepared for a multinational bank failure as there were no satisfactory arrangements in place to handle problems. He said that the current worldwide problems had sharpened the focus on the matter.
Prior to the meeting McCreevy had set out four possible options for changing Europe's supervisory landscape. The first involved giving level three committees a set of minimum, general responsibilities in the area of supervisory cooperation and convergence. The second was to give the level three committees a set of activities that they should perform to foster supervisory convergence. The third involved a combination of the first two options, while the fourth involved the creation of European regulation agencies which would bring together supervisors, central banks and finance ministries.
The two-day meeting, which central bankers also attended, heard calls for banks and financial institutions to make full and immediate disclosures of their on and off-balance-sheet exposures and losses in an attempt to ease the current market turmoil.
Chancellor Alistair Darling wrote to his European counterparts prior to the Brdo meeting urging them to formalise the current system of cooperation between regulators into more formal supervisory colleges. He has also been involved in discussions with Hank Paulson, US Treasury secretary, about the creation of transatlantic colleges which would monitor large cross-border banking institutions. This proposal is set to be discussed at the G7 meeting in Washington this week.
