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Preparation of Economic and Finance Ministers Council, Luxembourg, 9 October 2012

European Commission - MEMO/12/745   05/10/2012

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European Commission

MEMO

Brussels, 5 October 2012

Preparation of Economic and Finance Ministers Council, Luxembourg, 9 October 2012

COUNCIL OF ECONOMIC AND FINANCE MINISTERS (ECOFIN), 9 October

The EU's Council of Economic and Finance Ministers will start on Tuesday, 9 October at 10.00. The European Commission will be represented by Olli Rehn, Vice President and Commissioner for Economic and Monetary Affairs and the Euro, Michel Barnier, Commissioner for Internal Market and Services and Algirdas Semeta, Commissioner for Taxation and Customs Union, Audit and Anti-Fraud. A press conference is expected to take place after the meeting.

1. Financial Transaction Tax (FTT) (ET)

The Council will provide a state of play on the Financial Transaction Tax. At the June ECOFIN, it was concluded that it would not be possible to reach unanimous agreement on the FTT proposal. However, many Member States expressed an interest in moving ahead with this tax as a smaller group, through enhanced cooperation. In order to do this, at least 9 Member States must write to the Commission, formally requesting a Decision for enhanced cooperation, and setting out the scope and objectives of what they want to proceed with. A number of Member States have already formally written to the Commission, on this basis, asking to move ahead with FTT on the basis of the Commission's proposal (see IP/11/1085). Once the required minimum has submitted an official request, the Commission can present a Decision for enhanced cooperation to be voted in ECOFIN through QMV.

2. Revised capital requirements rules (CRD IV) (SdR)

a) Proposal for a Regulation of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms

b) Proposal for a Directive of the European Parliament and of the Council on the access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms and amending Directive 2002/87/EC of the European Parliament and of the Council on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate

On 21 July 2011, the Commission tabled a proposal aimed at strengthening the resilience of the EU banking sector while ensuring that banks continue to finance economic activity and growth (IP/11/915).

The EU was the first jurisdiction in the world to publish its legislative proposal implementing the Basel III agreements that all G20 members have committed to adopt and implement. The Commission proposal aims to respect the timelines agreed in the Basel Committee, namely entry into force of the new legislation on 1 January 2013, with full implementation of all measures by 1 January 2019.

Substantial progress was made on this text under the Danish Presidency, with a revised text supported by the Council at the Ecofin Council meeting held on 2 May 2012. During the Cyprus Presidency, trilogues between the Commission, Parliament and Council have taken place on 5 July, 11 and 20 September, and 3 October, with the next ones set to take place on 11 and 23 October. A vote in Parliament is foreseen in November.

More information:

http://ec.europa.eu/internal_market/bank/regcapital/index_en.htm

3. Any other business

a) Proposal for a Directive of the European Parliament and of the Council on the fight against fraud to the Union's financial interests by means of criminal law (ET)

The European Commission will present the proposal it adopted on 11 July 2012 for a Directive to strengthen existing criminal laws in the EU by establishing minimum sanctions and common definitions in the Member States for crimes against the EU budget such as fraud, corruption and money laundering (see IP/12/767). The Directive would create a more harmonised framework for prosecuting and punishing crimes involving the EU budget and stop criminals from exploiting differences between national legal systems. This will help to deter fraudsters, provide for more effective legal action at national level and make it easier to recover lost funds.

b) Current legislative proposals

Ministers will take stock of the progress of the following legislative proposals: the two-pack, the Deposit Guarantee Scheme Directive and the Directive on Bank Resolution and Recovery.

Two-pack (SoC)

The two regulations proposed by the Commission on 23 November 2011 to strengthen fiscal discipline in the euro area – the so called "two-pack" - are an indispensable step towards a genuine Economic and Monetary Union.

The first Regulation of the "two-pack" aims to strengthen budgetary surveillance for all euro area Member States and to reinforce the monitoring of those under the Excessive Deficit Procedure. It is also a concrete way to apply in EU law some of the commitments of the Treaty on Stability, Coordination and Governance, in particular those of the Fiscal Compact.

The second Regulation aligns and better integrates the principles used in providing financial assistance via instruments outside of the Union framework with the EU Treaty framework.

The Commission welcomes progress achieved so far in the recent "Trilogues" with the European Parliament and the Council. The Commission stands ready to assist the Cypriot Presidency in order to achieve a first reading agreement on the package as soon as possible.

The Commission has called the European Parliament and the Council to adopt legislative proposals on Deposit Guarantee Scheme (see IP/10/918) and on Bank Resolution and Recovery (see IP/12/570) to be adopted by the end of the year. (SdR)

4. Follow-up to the informal meeting of ECOFIN Ministers

Ministers will be updated on the Commission's banking supervision legislative package (IP/12/953).

5. European Semester 2012

Ministers will discuss the European Semester 2012 and explore how the process could be further improved next year.

The European Semester was applied for the second time this year. It started with the Annual Growth Survey in November 2011 and was successfully concluded in July 2012 with the adoption by the Council of the country-specific recommendations, which the Commission had adopted end of May (see MEMO/12/386).

6. Implementation of the Stability and Growth Pact (SoC)

Finance Ministers will discuss the outcome of the fifth review mission to Portugal and the next steps. It is recalled that the next disbursement to Portugal should amount to €2.8 billion from the side of the EU/euro area (EFSM/EFSF).

7. International meetings (SoC)

a) Follow-up to the G20 Finance Deputies meeting in Mexico City on 23-24 September 2012 and preparation of the G20 Finance Ministers and Governors meeting in Mexico City on 4-5 November 2012

Finance Ministers will discuss the follow-up to the G20 Finance Deputies' meeting that took place in Mexico City on 23-24 September. At that meeting, discussions took place on the global economic outlook, identifying key risks to the recovery going forward. In this context, Finance Ministers are expected to recall important progress made on adjustment in the euro area, both on internal economic rebalancing and on fiscal consolidation.

Last September, deputies also discussed the reform of the international financial architecture, including the 2010 IMF quota and governance reform, and the review of the IMF quota formula. In this respect, the EU stands ready to continue open and constructive negotiations with its international partners on the IMF quota formula review due in January 2013. On financial regulatory reform, Finance Ministers are expected to welcome Deputies' discussions on the need for the continued implementation of reforms, a renewed political focus, and a further strengthening of priorities.

Finance Ministers will also touch upon the G20 Finance Ministers' and Central Bank Governors' meeting, which will take place in Mexico City on 4-5 November, and which will be the last meeting under the Mexican G20 presidency. Finance Ministers will mandate the EFC to finalise preparations for this meeting.

b) Preparation of the annual meetings of the IMF and World Bank Group in Tokyo

The ECOFIN will discuss the preparations of the EU for the IMF Annual Meetings taking place in Tokyo on 12-13 October.

Finance Ministers are expected to agree on the importance of ensuring a balanced discussion on all risks to the global economy. Discussions should not only focus on the current challenges Europe is facing, but also on risks arising from the fiscal situation further afield, and the current slowdown of economic growth in emerging market economies.

Finance Ministers are also expected to stress the importance of timely and full implementation of the 2010 IMF Quota and Governance reform. 22 EU Member States have already concluded national ratification procedures and the process could be completed by almost all other Member States around the agreed deadline of the Annual Meetings in Tokyo. Member States are also implementing the commitment for greater representation for emerging markets and developing countries at the IMF Executive Board by reducing the representation of advanced European countries at the Board by two seats.

ESM

Please note that there will be an Inaugural Board of Governors Meeting of the European Stability Mechanism (ESM) on Monday, 15.00 and an Inaugural Board of Directors Meeting of the ESM on Tuesday, 8.00.


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