Brussels - European Union leaders will be discussing
measures to combat the global economic and financial crisis at their
two-day summit ending Friday. Here are some of the most important
points already decided or up for debate:
- 400-BILLION-EURO (538 BILLION DOLLARS) ECONOMIC RECOVERY
PACKAGE: Only half the sum relates to economic measures. The rest is
public outlays such as unemployment benefits, which increase during
times of crisis. The member states' economic relief programmes are
expected to total 170 billion euros. The EU Commission plans to spend
5 billion euros from the EU budget on certain projects, mainly in the
energy sector. Several countries, Germany included, are opposed to
this.
- REDUCED VAT RATES: Member states can reduce Value Added Tax for
labour-intensive service sectors such as hairdressers or restaurants.
Germany has said it will not follow suit.
- CAR INDUSTRY: EU countries caught up in the crisis involving
General Motors and its subsidiary Opel plan to work together. No
rescue efforts will be undertaken at national level without prior
consultation among the European partners.
- TOUGHER RULES FOR CREDIT RATING AGENCIES: Rating agencies in the
European Union will be subjected to mandatory regulation and
supervision. The agencies issue ratings on the creditworthiness of
issuers of debt obligations such as national governments or
companies.
- RULES FOR HEDGE FUNDS: Binding rules are planned for highly
speculative hedge funds, which up till now have been only indirectly
supervised by the banks who lend them money. The EU Commission is to
publish its proposals next month.
- SUPERVISION OF BANKS AND INSURANCE COMPANIES: No super-
regulatory body is planned for the financial sector in the immediate
future. The EU Commission favours strengthening and expanding current
supervision for banks, insurance companies and securities.
- TOXIC ASSETS: EU Commission guidelines call for credit
institutes to disclose their impaired assets and write them off
according to a coordinated evaluation of their worth before the state
steps in with financial assistance or buys them up by establishing a
'bad bank.'
- EXECUTIVE PAY: The EU Commission plans to present its proposals
by summer, covering among other things bonus payments to business and
financial sector executives that could lead to excessive risk-taking.
- IMF: Plans call for the International Monetary Fund to be
strengthened with financial means to ensure it is in a position to
respond more quickly and effectively in helping countries in serious
financial difficulties. A figure of 500 billion dollars has been
mentioned.
- TAX HAVENS: The EU wants firm action, including sanctions if
necessary, against uncooperative and non-transparent financial
centres. Several European countries, among them Austria, Luxembourg
and Switzerland, have promised to relax their strict rules on bank
secrecy.
- EMERGENCY FUND: The EU is ready to increase its emergency fund
from 25 billion euros to help member states facing liquidity
problems. It is currently negotiating an aid package for Romania.
Hungary has already received 6.5 billion euros and Latvia 3.1 billion
euros from the fund.
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