ANNUAL REPORT 2008 - Polymer Bank Notes of the World

2 SELECTED TOPICS RAISED AT MEETINGS WITHTHE EUROPEAN PARLIAMENTDuring the various exchanges of views betweenthe European Parliament and the ECB, a widerange of issues were addressed. The key issuesraised during these discussions are outlinedbelow.EUROPEAN PARLIAMENT RESOLUTION ON THEECB’S ANNUAL REPORT 2007In line with established practice, the EuropeanParliament adopted on 9 July 2008 an owninitiativeresolution on the ECB’s Annual Report2007. In its resolution, the European Parliamentacknowledged the full independence of theECB and recognised that publishing the minutesof Governing Council meetings could leadto political pressure on Governing Councilmembers. The resolution also recognised theexcellent work of the ECB in managing thefinancial turmoil and highlighted the fact thatthe major central banks – including the ECB –had warned against underestimating risks priorto the onset of the financial crisis. In addition,the resolution underscored the benefits of theEurosystem’s two-pillar monetary strategy.FINANCIAL REGULATIONThe European Parliament and the ECBcontinued their close dialogue on mattersconcerning financial regulation. In its resolutionson this issue, the European Parliament called forappropriate counter-cyclical capital requirementsfor all entities operating in financial markets.The European Parliament also saw a need forappropriate disclosure and accounting treatmentof off-balance-sheet items, and called for moreand better information on complex productsand the securitisation process. As regardsrating agencies, the Parliament advocated theestablishment of an EU review mechanism,and pressed for measures to improve boththe transparency of rating methodologies andquality assurance systems.During his appearance before the joint meetingof the European Parliament and the nationalparliaments on 23 January 2008, the Presidentwarned that the growing complexity of financialinstruments and the lack of clarity regardingthe exposure of financial institutions could giverise to increased uncertainty about the degree ofrisk involved and the ultimate bearer of theserisks, which could prompt a more generalisedcontagion. The President emphasised the needto increase transparency and to render theregulatory framework more counter-cyclical.He also called upon financial institutions toimprove their risk management practices. Onseveral occasions, the President underlined theneed for a swift implementation of the strategicroadmap of the ECOFIN Council setting outthe necessary policy responses to the financialturmoil.THE EU FRAMEWORK FOR FINANCIALSUPERVISION AND STABILITYThe EU framework for financial supervisionand stability also featured prominently duringthe discussions between the ECB and theEuropean Parliament. In its various resolutionson this topic, the European Parliament noted thatfinancial supervision in Europe had not kept pacewith the integration of EU financial markets.Accordingly, the European Parliament saw aneed for the creation of “colleges of supervisors”for the largest cross-border financial groups, andfor the strengthening and clarification of thestatus and accountability of the three Level 3Committees of the Lamfalussy framework (seeSection 2 of Chapter 4 for further informationon the Lamfalussy framework). The EuropeanParliament also urged the ECB and the ESCBto play an active role in the elaboration andimplementation of EU policies on macroprudentialsupervision and financial stability,and called upon supervisors and central banks toprovide the ECB – via the Banking SupervisionCommittee – with relevant micro-prudentialinformation. Finally, the Parliament advocatedlegislative action with a view to enhancing crisisprevention and management arrangements.During his appearances before the Parliament,the President emphasised that the potential ofthe Lamfalussy framework should be furtherexploited and that the decisions foreseen inthe roadmap on the review of the Lamfalussyframework should be implemented swiftly.The President also called for the rapidECBAnnual Report2008185