Toespraak eurocommissaris Barnier over de Eurocrisis in Litouwen(en)

Ladies and gentlemen,

I am very pleased to be here in Vilnius and to participate in this conference.

I have just had the pleasure of meeting President Dalia Grybauskaité. She used to be a Member of the European Commission too.

Both of us are convinced that reinforced financial regulation is crucial to avoiding a new crisis.

In 2008, Lithuania was hit very hard by the crisis. Harder than other Member States. Its GDP fell by more than 14% in 2009 !

But the Lithuanian economy has strong assets. And it returned to growth last year. (+ 1.3%).

However, it would be a mistake to say that the crisis is over.

Many citizens and small companies are still suffering.

In Lithuania, unemployment is still more than 16%. This is very bad news for young people trying to enter the labour market in particular.

Another concern relevant for the younger generation - even if they might not think much about it - is the amount of sovereign debt.

On this issue, I want to be very clear: the current situation is not a crisis of the euro.

It is a crisis of the sovereign debt of some countries, in the euro area and elsewhere.

My conviction is that the situation would be far worse without the euro.

The euro has proved to be effective protection against currency speculation, and the vicious circle of devaluation, inflation and lack of confidence in the currency.

We do not suffer from excessive integration. Our problem is rather that when we created the euro, we did not create the tools to go with it. We did not push integration far enough. But we are now.

The euro is a great monetary instrument. And I hope that Lithuania will soon join the club of those benefiting from it.

We should now balance our monetary tool with an equally strong budgetary arm. That is also what we are now doing.

Ladies and gentlemen,

These monetary and budgetary tools are badly needed. But they must not prevent us from adopting an efficient framework for financial regulation.

This is our utmost responsibility.

We are putting in place a comprehensive reform package based on five principles:

I - Supervision,

II - Transparency,

III - Stability,

IV - Responsibility,

V - Protection.

Allow me to develop briefly each of these principles.

I - First, supervision

The crisis revealed there was no proper coordination between national supervisory authorities. No institution anticipated risk accumulating in the financial system or was able to take measures at European or global level.

Therefore, one of our first tasks was to envisage a new supervisory architecture. And we achieved it.

The new system started on the 1st of January 2011. It is composed of three European supervisory authorities: for banks (EBA), financial markets (ESMA) and insurance and occupational pensions (EIOPA).

These authorities will play a key role in preparing new common rules. They will ensure the proper application of European law. They will encourage cooperation between national supervisors. And they will settle possible disagreements between them.

This cooperation will benefit Lithuania, where the banking sector is, for the large part, foreign-owned. Our reform gives the new Authorities a role in ensuring that colleges of supervisors function well, in the interests of both home and host country supervisors.

The European Securities and Markets Authority has exclusive competence to regulate credit rating agencies. This is real progress when we know the tendency of these agencies to get things wrong and their influence on financial markets.

We will soon present new proposals to reduce our overreliance on credit rating agencies, and new rules as regards sovereign debt ratings.

Ladies and gentlemen,

II - To succeed, the new European supervisory agencies will need a more transparent financial sector. This is our second principle.

In 2008, opacity played a major role in the transmission of the crisis. No one knew who was holding risky assets like subprimes. And this led to general suspicion.

Transparency must apply to all financial institutions. This is the purpose of our directive on alternative investment fund managers (AIFM), which imposes reporting obligations on financial actors like hedge funds.

Transparency must also concern all financial instruments and techniques, even the most sophisticated ones.

We have made important proposals on derivatives and short-selling. These will allow us to act efficiently against abusive use of credit default swaps on sovereign debt.

These initiatives are now being debated by the European Parliament and the Council. I trust both institutions to find an agreement in the coming weeks.

Transparency will help reduce the probability of future crises. But it will not be sufficient to prevent a new crisis from happening. We also needs tools to limit the effects of potential crises.

III - This is linked to our third principle: stability

In 2008, banks were not capitalised enough to face the crisis and continue financing the real economy.

We must avoid a repetition of this situation. And that is what our proposal on capital requirements (CRD IV) is about.

This proposal faithfully implements the Basel III agreement.

It requires banks to hold more capital, of better quality.

This package of measures will represent a significant cost for the banks. But the efforts will be spread over 7 years (until 2019) and will be more than compensated by the benefits of a stronger banking system.

The Basel Committee estimates the EU will gain between 0.3 and 2 GDP points per year.

But CRD IV goes further. It also aims to create a Single Rulebook of financial regulation. It will be directly applicable in all Member States.

Our goal is to create a real single market for financial services, making it easier for cross-border banks to ooperate in Europe and to allow supervisors to act in a coordinated way.

But adopting this set of single rules does not mean we will forget about national specificities.

For instance, each Member State will be able to take extra measures targeted at specific risks, such as real estate credit.

Supervisors will also be able to require more own funds from banks that face more risks.

IV - With CRD IV, banks will be more resistant. But we also need financial institutions to be more responsible. That is our fourth principle.

The huge bonuses which were being given to traders before the crisis were an incentive to short-termism and excessive risk-taking.

That is why we now regulate bonuses. Under our new rules, a large part of bonuses must be deferred for at least three years. And we will go further if we need too.

We will also propose soon a new framework on bank recovery and resolution. By setting up common tools, our goal is to prevent potential crises from having systemic effects. We also want to avoid a situation where the cost of a potential new bank crisis is borne once again by taxpayers.

I believe that these proposals on responsibility will increase confidence in the financial sector.

But there is another crucial condition for the return of confidence: citizens and consumers should feel protected.

V - And this is our last principle: protection.

One of our first initiatives after the crisis was to ensure that every bank in Europe, in case it fails, guarantees each depositor up to 100,000 euro.

We have also proposed measures to regulate mortgage loans, which is one of the most important financial events in life. The responsible lending directive will make sure that all mortgage lenders act in a fair, honest and professional manner.

Besides these initiatives to protect consumers, we want all citizens to be able to benefit from the opportunities created by the financial sector.

In Europe, 30 million adult citizens do not have access to a bank account. For these citizens, day-to-day actions like renting an apartment or receiving a salary are very complicated.

That is why we have proposed to ensure that every citizen has access to basic banking services at a reasonable price.

Ladies and gentlemen,

Step by step, we are taking important measures which will make the financial world safer.

This is a condition for the success of our growth agenda and the Single Market Act, which constitutes the theme of the second part of my mandate.

We will also adopt a wide-ranging set of measures to improve access to finance for small businesses, and to increase citizens' mobility, through the recognition of professional qualifications. We will also encourage inventors, by creating a European unitary patent.

All these actions - and many others - can restore sustainable growth. But to do so, they will need to be based on a sound and healthy financial system.

I am confident that the new regulations we are putting in place will allow the financial sector to fully play its role in financing the real economy.

Thank you for your attention!