BRUSSELS (MNI) – Crisis management in the financial services sector
and the extent to which the cost of pension reforms should be taken into
account under the Stability and Growth Pact are among the topics on the
table for next Tuesday’s meeting in Brussels of European Union finance
ministers.

They will also discuss the bail-out package for Ireland and are set
to adopt the legal text allowing for it, according to a well-placed EU
source. In addition they will discuss economic governance and bank
levies, the source said. They will also lay the groundwork for the EU
leaders’ summit on December 16-17.

With regard to crisis management, the ministers will discuss the
development of “a comprehensive EU-wide framework for closer policy
coordination on financial stability” and could agree a roadmap to
achieve this ahead of European Commission proposals that are due in June
2011.

Draft conclusions on this subject, obtained by Market News
International, include points such as the establishment of a
cross-border stability group for large transnational EU banks; the
conclusion of cross-border cooperation agreements; and public
consultation and policy debates on the Commission proposals.

Ministers will also discuss whether priority should be given to
domestic and cross-border banks that pose a systemic risk, “with a view
to covering, as far as necessary” eventually all financial institutions.

Ministers may also agree to propose a series of actions that would
be taken by the Commission. They may ask it to present in 2011 an
assessment of crisis management and resolution measures, and to further
specify how the framework will ensure consistency of early intervention
practices.

They may also ask it to clarify cooperation with other public
authorities; to consider allowing national authorities to rely on action
initiated by the parent company of an institution; and to analyse the
financing implications and the impact of ex-post financing arrangements.

For themselves, they may agree there should not be a single
resolution model but at least a minimum legal list of resolution powers
to underpin the framework “‘whilst avoiding to unduly constrain national
authorities’ capacity to apply the tools flexibly, rapidly and in a
coordinated way in response to crises.”

PENSIONS

Regarding pensions, certain member states, notably Sweden and
Poland, have argued they should not be penalised in the context of the
Stability and Growth Pact for excessive deficits given the pension
reforms they have made. Ministers will discuss the extent to which this
should be taken into account.

The ministers are set to agree that structural reforms should not
be discouraged by the Stability and Growth Pact, nor should their
reversals be encouraged. According to the draft conclusions, the impact
of pension reform could only be partially discounted. They note however
that Poland would like to see full compensation.

“The Council agrees that systemic pension reforms which ultimately
have a positive impact on the sustainability of public finances in the
long run, but have a negative impact on the government deficit and debt
in a first (but possible long) period are important and should not be
discouraged in the [Stability and Growth Pact].”

In text that is for now in square brackets, ministers could decide
to extend the number of years for which costs are discounted, “provided
that the risk to the sustainability of public finances of the member
state concerned is not high.”

They may also add that a methodology to estimate and validate such
costs will need to be agreed and that it is important to “well-define”
reversals of pension reforms.

Other topics on the agenda for the meeting are health care reform,
a code of conduct on harmful taxation, administrative cooperation on how
to combat tax avoidance and fraud, VAT treatment of travel agencies, and
VAT treatment of postal services.

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