22 Jun 2009

EU proposes overhaul of financial regulations

11:57 am on 22 June 2009

European Union ministers have agreed in principle to a sweeping overhaul of member countries' financial regulatory system.

The ministers have been meeting at a two-day event in Brussels to tackle a range of issues.

Their gathering comes after United States President Barack Obama revealed his reforms on Wednesday.

The EU leaders are proposing three new financial oversight agencies that will keep tabs on banks, insurers and credit-rating agencies.

They also want a European systemic risk board that is meant to act as an early-warning system for future crashes of the system.

Willem Buiter, professor of European political economy at the London School of Economics, says the two overhauls proposed in the US and EU are far from radical.

Enough, says EU bank of stimulus packages

Meanwhile, Jean-Claude Trichet, president of the European Central Bank, says governments that have borrowed heavily to fight the economic crisis should not accumulate any more debt.

Mr Trichet says existing stimulus packages are sufficient and any more aimed at jump-starting economies would only drive governments further into debt.

He says global economic activity should come "close to stability" later this year, and that some growth would appear in 2010.

Many European countries have indicated they will not offer further economic stimulus despite continued spending in the United States.