Integrated financial and capital markets are an essential element of any dynamic and competitive economy. They must comprise a broad spectrum of financing and investment opportunities and be subject to well-functioning, efficient regulation.
In December 2005, the European Commission published a White Paper on financial services policy outlining the focus up to 2010. Existing legal provisions are to be resolutely transposed into national law in the individual Member States. In addition, the European Union is given responsibility for coordinating Member State cooperation with respect to state supervision of the capital markets.
Focus of the German presidency of the European Council with regard to financial and capital markets
Progress towards an integrated market for financial services
One of the priorities of the German presidency of the European Council will be to make sustainable progress in the EU strategy on creating an integrated European market for financial services:
- EU citizens must be able to routinely enjoy the personal benefits afforded by competitive financial services. To this end, the German presidency will continue the work currently being undertaken in the Council working groups and will push on, in particular, with the measures towards an efficient single payments area for the EU.
- Moreover, the German presidency will resolutely continue the strategy of better regulation and will seek to closely evaluate the progress made towards integration. Better regulation means simpler and, where possible, fewer rules not just in the Member States but also at the European level. The underlying philosophy is to reduce administrative costs for companies and, in doing so, to improve the framework conditions. In this regard, Germany considers it particularly suitable to adopt approaches which build on existing market structures and which make use of market forces for further development. One such example is the clearing and settlements industry's new code of conduct which was agreed with the financial industry in the second half of 2006.
- The optimisation of European cooperation in financial market supervision remains an important issue which must be supported. The sheer number of financial market regulators and, in particular, the as yet sub-optimal interaction between them pose an obstacle to integration. In light of this, the German presidency intends to continue the evolutionary approach already adopted to strengthening the convergence of regulatory practices in Europe and thus promote the creation European structures within financial market supervision. The second interim report by the Inter-institutional Monitoring Group on the Lamfalussy process, announced for the beginning of 2007, is expected to provide useful starting points in this regard.
- Moreover, the work towards better supervision of the acquisition of substantial holdings in financial institutions will be continued during the German presidency. With regard to financial market stability, the German presidency will press for greater transparency of hedge funds and will advance the underlying work towards this goal on the European level.
- In addition, it will support the efforts of the European Commission to reach viable compromises in drawing up a proposal for a Solvency II framework directive, in order to strengthen the competitiveness and vigour of European insurers and the interests of policyholders.
