EU Ministers Seek Financial Overhaul |
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June 9,2009
European Union finance ministers sought agreement Tuesday on a major overhaul of their financial system to avoid another banking crisis like the one that has plunged the 27-country bloc into recession.
European Union finance ministers sought agreement Tuesday on a major overhaul of their financial system to avoid another banking crisis like the one that has plunged the 27-country bloc into recession.
Under a draft deal, the ministers are discussing the creation of a European Systemic Risk Board to give early warning of threats to financial stability, such as the wave of securitized -- or repackaged -- debt that has helped punch holes in banks' balance sheets.
EU governments are also looking at setting up three supervisory agencies to watch over banking, insurance and financial markets, overseeing national supervisors with the power to sanction countries that don't apply EU rules.
The overhaul push at a meeting of EU finance ministers comes a day after the International Monetary Fund warned that European banks face $1.2 trillion in losses from loan defaults and devalued securities. The IMF said a deeper recession could see more loans go unpaid, especially in Eastern Europe, where some Western banks have invested heavily.
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