It’s not ‘business-as-usual’, Ecofin chief tells regulators

Andrej Bajuk, Slovenia’s finance minister, is urging member states to intensify co-operation among financial supervisors to improve their readiness for cross-border financial crises.

"We are in a situation where we are supposed to act rapidly. This is what the citizens expect from us," said Bajuk, after chairing a meeting on Tuesday (22 January) of EU finance ministers (Ecofin). He advised governments to drop their "business-as-usual" approach and to take action, rather than waiting for results from an action plan established at the end of last year by Ecofin.

Finance ministers discussed the action plan - or roadmap - over lunch on Tuesday. Part of the plan covers the ongoing reform of the Lamfalussy process, which was set up in 2000 to speed up financial integration. Bajuk said that discussions on introducing "supranational regulatory structures" as part of the reform would only delay progress. "We should enhance co-operation now and then further solutions will evolve," he said.

"It would be incomprehensible to an EU citizen if he were to look at the roadmap and see that some things won’t be transformed into action until 2009."

The EU banks hit by recent market turbulence, which included the UK’s Northern Rock and Germany’s WestLB, did not operate outside national borders. But if any cross-border banks had been affected by the liquidity crisis, the results might have been far worse.

"The fact that we have not experienced this so far means that there is no obvious pressure, but we have to be prepared for it," said Bajuk.

An official from the European Commission said that there was a "clear consensus" on sticking closely to the roadmap. Charlie McCreevy, European commissioner for the internal market, was, he said, "in favour of developing a clear vocabulary on how to deal with issues of supervision", warning of the dangers of disorderly reform. "Let’s say if banking supervisors get together, they might not all have the same idea of what they’re working on. That is why they need a common vocabulary."

Italy and the UK are at loggerheads over the reform of the Lamfalussy process. Italy’s calls last year for deeper integration of supervisory networks were rejected by the UK, which traditionally favours a light-touch approach. The two countries will be joined by France and Germany next week (29 January) for a mini-summit in London on the financial crisis.

Bajuk said that the meeting could help to further the goals of Ecofin, but added: "If it were a formal decision-making process outside the institutional channels, then it would be something to be concerned about." (See also business section)

Andrej Bajuk, Slovenia’s finance minister, is urging member states to intensify co-operation among financial supervisors to improve their readiness for cross-border financial crises.