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Source : Financial Times
Page of Review : 1 
Page of Document : 1 
Page of NewsPaper : 13 
Category :ECONOMIA E POL. INTERNA 
Author : RASSEGNA FLASH 

Abstract :
Europe needs a single fìnancial rulebook Tommaso Padoa-Schloppa 
"last  week the European Union fìnance mmisters decided 
that co-operation In fìnancial regu-J—^IatioQ and supervision 
shouid be atreagtheneti. They willlook at thè issue again in 
Aprii. Indeed, time is running out to show that thè evolution 
towards tuli co-operation can meet thè chalienge of Europe's 
fìnancial integration and that thè revotution of creatine a 
single supervisory authority is there-fare not necessary. Thè 
recent financial turmoil has con-finned thè shortcoarings of 
thè current system.. In thè monetary field, thè European Centrai 
Bank aeted quìckiy and decisively, getting high nlarks even 

trom tbose who had iong questìoned ita ability to manage a 
crisis. Thè European supervisory function, on thè con-trary, 

has been almost absent. Even with signs of a clear risk of 
contagion, no conunon analysis of thè situatìon, no aharing 

of confldential information, no co-ordinated communicatìon 

and no emergency meetings appear to nave taken piace among 

EU supervisors. fiven thè ECB, uniike thè Federai Reserve, 
Ìacked thè informatioa on thè soundness of counterparties normally 

: avallante to national centrai banks. thè severe judgment 
expressed lasi : June by thè Internatìonal Monetary Fund was 

confinned: in crisis situa-tions, European supervisora may 
take a narrow national perspective and resist poòling cruciai 
information that wouid : aid conunon action. In spite of progress: 
in recent years,thè system is stili una-Me to respond effectively 
to thè chal-lenges of a largely integrated market. Coniioon 
principles bave been devel-pped, but thè convergence ot day-by-day 
practice has lagged behind. A banking group providing finandai 
serv-icea in, say, 10 countries must fultil 10 different reporting 
systems and capitai In cristo «Ituatlon», may take • mirrow 
rortiomil pi-spectiv and rutot poòling Infonnatton requirements, 

although they ali stem  from thè same European directives, 
Current arrangéments for coordinat-ing national supervisory 
activitiea are overly complex and bùnieosome. They bave proved 
incapable of ensuring effi-cient area-wide supervisory teamworit 
during a crisis. There Is no aingte piace in thè EU where thè 
same eyes can; simultaneously look at tìie reported' data concerning 
thè two or three doz-ens of EU-wide institutions. whose; tightìy 
woven network of operatióna, creates a potential tor cross-border 
contagion and systemic risk. We speak so much ot superviston, 
but this Ìs neither2 "vision" nor "super". Moreover, as market 
integration streagthens, competitioo among national exchanges 
and fìnancial institutions puts pressure on national regu-lators 
to obtain privileged treatments within thè wìde range of options 

offered by European legislation and supervisory standards. 
Thia faas two regrettable conse" quences. It creates as extra 
regulatory burden entailing a ìoss of;colnpetitive" ness for 
Europe'a finaneial industry and it offers ìnadequate protection 
for inveatore. We must theretore now act decisively to eohance 
Eurcs>®an supervisory structures. This appHes In par-ticular 

to thè euro «rèa, where a single payment iafrastnicture, a 
smgle liquid-ity souree and interconnected iender of last resort 

functions are m piace. Strengtheuing thè supervfeory struo 
ture for muìtìnational financial institutions means achieving 
two resulta: a single European rulebook aimedat ensuring equaì 
treatment, low coats oi. compliance and thè removal of regola-tory 
arbitrage; and an mtegrated super-visloo of EU-wide groups, 
resting on a. complete poòling of inftatnation and thè enhancement 
of thè pòwers of thè colleges of supervisorB. iSuch progress 
wouid not reaùire thè revolutionary step of creating a European 
supervisor, twin to thè ECB, as advocated by some; large market 
playere. It wouid b& entirely evolutionary - taking seriously: 
thè proposais made seven years ago by thè Lamtalussy group, 

which received: high praise but scant impìementatlon. What 
we need is active goodwill by' existìng bodies and minor ad^ustmenta 
to thè Community legislatìon. Natiooàl authorities wouid not 
be deprìved ot  thè responslhility for decisions affect* ing 

financial instìtutions; they wouid sùhply be calied to act 
on enhanced co-operation. Thè argument that such a step wouid 
not be feasible witeout a prior agree-, ment on bow to share 
thè burden of a possible systeraic crisis is not just invalid, 
It is irresponsible. It amounts to thè dismaying conclusion 

that no such agreement is llhely to nave been reached once 
tiie tìme of crisis comes; A change of gear is urgent to cope 

wltS a rapidly Integrating European financial system. Oniy 
politicai impetua from govemments can bring it about. Thè writer 

is Italy's economy and ftnartce minister'