Ecofin targets financial services market barriers

By Stewart Fleming

Date: 06/10/05

European Union finance ministers will hold detailed discussions at next week's Ecofin Council of the obstacles that have to be overcome to continue the integration of financial services.

Both Internal Market Commissioner Charlie McCreevy and Competition Commissioner Neelie Kroes are expected to attend the meeting on 11 October. Ministers will also hear from the heads of the so-called 'Level Three' Committees, the Committee of European Securities Supervisors (CESR), the Committee of European Banking Supervisors (CEBS) and the Committee of European Insurance and Pensions Supervisors (CEIOPs), about efforts that are being made to improve co-ordination between financial market regulators in the member states. Closer co-operation between regulators is seen as essential for the development of a fully integrated EU financial market.

A year ago the informal council of finance ministers meeting in Schevingen asked the Commission to examine the EU banking market. The Commission's report will be discussed next week. Officials said that the paper did not make specific policy recommendations but dealt with issues such as authorisation procedures, taxation, corporate governance and competition policy which could make it difficult for banks to merge or operate across borders.

Some observers are expecting, with the allegations that Antonio Fazio, governor of the Bank of Italy, obstructed foreign takeovers of Italian banks still fresh, that the Ecofin may call for regulators to make public the grounds on which they come to decisions on cross-border deals.

The participation of Kroes underlines the importance being attached to finding market-orientated levers, rather than EU directives, to move integration forward. Last month it emerged that Italy's competition authorities had launched an investigation into the Italian stock exchange's integrated clearing, trading and settlement business model.

Lowering the costs of cross-border clearing and settlement is one of the priorities for policymakers in pursuit of deeper and more efficient pan-European financial markets.

Bank payments systems are also a major concern. Gertrude Tumpel-Gugerell, a member of the European Central Bank's (ECB'S) executive board, warned this week that if European banks were too slow in moving towards the creation of a single euro payments area "global competitors and not European banks themselves will bring about consolidation and restructuring in Europe's banking sector".

• Eurozone finance ministers will meet on Monday (10 October) to discuss an economic outlook that is dominated by higher energy prices. The ECB was today (6 October) expected to leave interest rates unchanged even though flash estimates put eurozone inflation in September at 2.5%, above the ECB's objective of less than 2%.

Preview of the Economic and Financial Affairs Council, meeting in Luxembourg on 11 October 2005. European Union Finance Ministers were to hold detailed discussions of the obstacles that have to be overcome to continue the integration of financial services.