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French Presidency of the European Union: Five areas of focus to improve banking and financial integration

The French Banking Federation (FBF) would like to see France, during its Presidency of the Council of the European Union, improve banking and financial integration while encouraging growth and employment in Europe. To this end, the FBF has identified five key areas of focus with respect to current issues:


1. Financial turmoil: ending the crisis and building a stronger financial system

The FBF considers that the first priority is to get past the crisis. In addition to the normalisation of the bank refinancing market and the controlled use of realistic accounting valuation models in difficult market periods, it also recommends the adoption of structural measures aimed at getting the market back on healthy footing:

  • subjecting all lending institutions to a banking-type prudential supervision;
  • reviewing the role and duties of ratings agencies;
  • stepping up European coordination of national supervisory authorities;
  • improving transparency and adapting accounting valuation methods for relatively illiquid structured products.

Finally, it is necessary to discuss the procyclicity1 of regulations governing banks, as recommended by the Financial Stability Forum.


2. Banking supervision: moving from a national to a European approach

The current fragmentation of the banking supervision system at the national level is negatively impacting the effectiveness of the supervision of banking groups and the integration of the European market; the financial crisis particularly underscores the need for a supervisory system capable of covering pan-European groups. For this, the FBF recommends :


supervision of groups by panels of supervisors working under the authority of the parent company supervisor;

enhancing the role and powers of the CEBS2 with a view to encouraging cooperation and convergence of practices between national supervisors.


3. Completing the integration of the financial markets

There is still progress to be made in the areas of asset management and post-market activities:

The FBF supports the creation of a European asset management market through the revision of the UCITS directive3 , including in particular a European passport issued to investment firms. Such a passport would enable investment firms to develop their activities from a single country.

The code of conduct governing "clearing and settlement-delivery" infrastructures must be closely monitored; certain commitments still fail to meet the expectations of issuers and operators alike (e.g. comparability of services).

The FBF favours the creation of a single platform for unwinding Euro-denominated securities transactions (Target 2 Securities) for the purpose of improving the efficiency of European settlement-delivery systems.


4. Towards greater integration in retail banking

The FBF regrets that no legal proposals are on the table for 2008. It has long argued the practical value of a single market. The FBF also favours the development of a European mortgage market through a full targeted harmonisation directive4 , which is the only initiative capable of truly harmonising the market. The FBF also supports European undertakings relating to customer mobility.


5. Payments: clarifying the legal framework to facilitate European projects

The harmonisation of payment instruments is of major import for Europe. As such, it is crucial to successfully transpose the Payment Services Directive in a harmonised manner and to clarify the economic rules applying to interbank services. The legal vagueness currently surrounding interbank fees seriously compromises the launch of direct debit and the project to create a European payment card under SEPA (Single Euro Payments Area).



French banks have always argued in favour of European integration, which all surveys have shown to have a positive impact:

  • for the banking industry, thanks in large part to economies of scale and range, a better distribution of risks, greater innovation and improved competitiveness in today's globalised competitive environment,
  • for the 450 million European consumers who will enjoy the same level of protection throughout Europe, with access to a broader range of products and services, and will be better able to compare different offers.



1 excessive variability to fluctuations in the economic cycle.

2 CEBS: Committee of European Banking Supervisors

3 UCITS: Undertakings for Collective Investments in Transferable Securities

4 Full targeted harmonisation consists, for a given area, in completely harmonising all of the most significant components involved in carrying out cross-border offers (precontractual information, interest rates, right of retraction, early repayment, etc.), which are subsequently identical in all EU countries.


CONTACT

Colette Cova
email : ccova@fbf.fr
Tel : 01 48 00 50 07

Kenza Benqeddi
email : kbenqeddi@fbf.fr
Tel : 01 48 00 50 08

 
 
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