Downing Street Says » EU Leaders Meeting

Asked for more information on the meeting taking place tomorrow, the PMS replied that in general terms, the leaders would be primarily discussing the economy. They would no doubt want to take forward some of the issues that were raised in the UK-France-Germany joint declaration on financial markets, agreed at Lisbon on the 19th October 2007. For those who were interested in the detail, it would be best to go back to that agreement.

Issues included transparency surrounding the off balance sheet risks faced by banks, cross-border cooperation and management of financial crises, which was also relevant to some of the issues raised by the Prime Minister recently in relation to the reform of the international financial institutions, such as the IMF, the role of ratings agencies in financial markets and the extent to which they enhanced transparency and the role of sovereign wealth funds. The PMS added that it would be a wide-ranging discussion primarily on the economy and financial markets, but it would not be surprising if it were to broaden out as well. It would be an informal meeting, so therefore it was difficult to anticipate exactly in advance what the wider issues could be.

Asked how long the timetable would be, the PMS said it would last for several hours. Asked to confirm the cast-list, the PMS said that in attendance would be the Prime Minister, President Sarkozy, Chancellor Merkel, Prime Minister Prodi and President Barrosso.

Asked what spurred the meeting, the PMS said that back in October, the Prime Minister, President Sarkozy and Chancellor Merkel issued a joint declaration on some of the relevant financial market issues at the time. There was a meeting of the Finance Ministers of the EU members of the G8, plus the Commission earlier this month, which had helped prepare for this meeting and there would be another meeting of G8 Finance Ministers in February. So this was the European member’s of the G8 plus the Commission coming together, to discuss a range of economic and financial issues.

Asked when some deliverables from the process would be acted upon, the PMS replied that they were having the meeting tomorrow, so people would have to see what would come out of it. Asked if Societe Generale had fought its way onto the agenda, the PMS replied that he thought more general policy issues would be discussed rather than specific companies.

Put that if a bank didn’t even know what its traders were up to, it would be difficult for a central bank or an international body to know, the PMS said he did not want to comment on individual companies, but one of the issues that would be discussed would be how to improve the transparency around off balance sheet risks faced by banks.

Asked for the Governments view on sovereign wealth funds, the PMS said that the Governments view on the matter had been expressed several times by the Prime Minister on his trip to China and India; the Government welcomed investment by sovereign wealth funds as long as they operated on a commercial basis and by our rules.

Put that the French and Italians were pushing for a regulatory framework whereas the UK were looking for more prescriptive regulation, the PMS said that our approach had always been to try to avoid heavy handed regulation in response to crises of this kind.

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» Monday, January 28, 2008

EU Leaders Meeting

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