Dealing with the economic and financial crisis together across Europe
Launch of the Swedish Presidency of the EU: Association of German Banks warns against countries going it alone

01 July 2009 - “In the coming months the Swedish government faces the task of successfully carrying on numerous measures to fight the economic and financial crisis at EU level,” Prof. Manfred Weber, Chief Executive of the Association of German Banks, said today as Sweden took over the EU Presidency.

In the run-up to the G20 summit in Pittsburgh in September 2009, Sweden had an important role to play particularly when it came to persuading the EU member states to speak with one voice. “An approach that continues to be coordinated at European or – even better – international level is the key to curbing the impact of the crisis on the financial markets and the consequences of the economic slump,” Mr Weber added.

He said he was against countries going it alone: “Since markets are closely entwined globally, what use is a regulatory agenda that is not backed worldwide by all the major financial centres and implemented by these?” Protectionist competition and a fragmentation of financial market rules had to be avoided, as otherwise this could lead to renewed instability in the long term.

Against this backdrop, further progress in reforming banking supervisory structures was also essential. During the Swedish Presidency of the EU, implementation of the proposals presented by the European Commission in this connection in May should be driven forward quickly. The EU had the chance to play a leading role in effective financial market supervision and control. “The current fragmented supervision of cross-border banking groups is at odds with the politically desired integration of financial markets. The European Commission's proposals are a major step forward towards European supervisory structures, which the Association of German Banks has been calling for for many years,” Mr Weber said.

However, “thinking ahead and moving forward” was needed here in the future as well, since in the long term responsibility for the supervision of banking groups operating Europe-wide had to be concentrated in one place.

In the discussion on sustainable public finances that is also on the agenda in Europe, the EU needed to make a clear commitment to the Stability and Growth Pact. “Amending the Pact doesn't make sense, nor is it necessary. The rules are flexible enough to give financial policymakers enough room despite the current burdens,” Mr Weber pointed out. If the EU were to soften the rules, this could cause serious harm, especially should doubts arise on the markets about whether some EU member states were able to clear their public debt. Then there was the danger of higher risk premiums on bonds for all eurozone countries and perhaps of unwelcome exchange rate reactions.”