LUXEMBOURG (AFP) — EU finance ministers launched a drive on Tuesday to bolster Europe's defences against financial crises after recent market turmoil concentrated minds on potential dangers.
Eager to restore confidence to nerve-wracked markets, the ministers ordered measures at a meeting in Luxembourg to shed light on the sometimes murky world of high finance while also improving supervision among authorities.
"The recent market turmoil has thrown the spotlight clearly on the need to ensure cooperation and coordination between supervisory authorities," EU Internal Market Commissioner Charlie McCreevy told reporters after the meeting.
Ministers agreed to a "roadmap" leading to closer cooperation among regulators and greater transparency in complex financial instruments that have come under fire during the current crisis.
The measures also included plans to look into the activities of credit rating agencies, which have taken heat over possible conflicts of interest for both rating debt and also acting as consultants to issuers.
The ministers called on the European Commission to give fast-track treatment when it reviews whether government bailouts in big banking crises constitute illegal state aid so as to limit the broader impact.
Separately, French Finance Minister Christine Lagarde said that Europe should consider measures to standardise some of the more complex financial instruments available so they would be better understood.
Roller-coaster volatility has gripped financial markets since early August as concerns about high-risk home lending in the United States have prompted investors worldwide to reassess their overall risk exposure.
Amid the recent market turbulence, some financial institutions have discovered that they were bearing more risk than they thought due to often opaque repackaging of complex financial instruments.
Major British mortgage lender Northern Rock had to be bailed out by the Bank of England last month as banks clamped down on lending to each other over fears that some counterparts were overloaded with risky loans.
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