Brussels - European Union leaders are 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 (540 BILLION DOLLARS) ECONOMIC RECOVERY PACKAGE:
Only half of this sum relates to extra stimuli. The other half
involves non-discretionary public spending such as unemployment
benefits, which tend to increase during times of crisis.
The member states' combined economic relief programmes are
expected to total about 170 billion euros. The European Commission
plans to add a further 5 billion euros from the EU budget on a number
of projects, mainly in the energy sector. However, Germany and
several other countries have voiced opposition to such a plan,
disagreeing either on the source of funding or on the proposed list
of projects.
- REDUCED VAT RATES: Member states can reduce Value Added Tax for
labour-intensive service sectors such as hairdressers or restaurants.
France pushed particularly hard for such a measure, but Germany has
said it will not follow suit.
- CAR INDUSTRY: EU countries caught up in the crisis have said they
want to work together and avoid damaging each others' industry. This
means no national rescue efforts will be undertaken without prior
consultation among 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 European Commission
is to publish its proposals soon.
- SUPERVISION OF BANKS AND INSURANCE COMPANIES: No super-regulatory
body is planned for the financial sector in the immediate future. The
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, insurance schemes, or buys them up by
establishing a 'bad bank'.
- EXECUTIVE PAY: The Commission plans to present its proposals by the
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
floated.
- 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, but may resist further moves.
- BAIL OUT 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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