News from the Archive
9 September 2006, Informal Ecofin meeting in Helsinki
Europe should reduce the vulnerability of its energy system
European Union finance ministers and central bank governors convened in Helsinki on 8-9 September 2006 for an informal meeting. The topics discussed included the economical and financial aspects of the energy, financial market questions as well as globalisation. Minister of Finance Eero Heinäluoma hosted the meeting.
Ministers re-stated the Manchester agreement to maintain discipline in reacting to high oil prices. They confirmed their commitment to avoid distortionary fiscal and other policy interventions that prevent the necessary adjustments.
- Beyond any short-term measures, and in the context of increasing reliance of the EU on external energy sources, we emphasized the importance of reducing the external vulnerability of the European energy system, Heinäluoma pointed out.
Diversification of energy supply, improvement of energy efficiency and promotion of renewable sources, as well as innovation all have a part to play while paying due attention to cost-effectiveness of measures and to consistency with existing fiscal obligations.
Discussion on globalisation focused on the role of financial markets
The discussion on globalisation focused especially on the role of financial markets in promoting RD, innovation and productivity. Ministers and Governors underlined that in the global division of labour, the role of the EU countries is in high value added production. They further noted that the future innovations in Europe will depend critically on the overall functioning of the Single Market and the ability of the labour markets to reallocate labour for more productive purposes.
- We need more integrated and efficient financial markets and we need to put special emphasis on the efficiency of public sector actions. At the same time, full benefits of efficient financial markets will not be realised if labour and product markets are not prepared for challenges brought about by the increased global competition, Heinäluoma said.
Recent news on the economy positive
In the discussion on the current economic situation, the ministers and governors noted with satisfaction the acceleration of growth in the EU. Both the EU and the euro area were growing above potential in the first half of 2006. It is particularly welcome that domestic demand has been improving.
- The suspension of the Doha Development Round is deeply regrettable and worrisome, Heinäluoma emphasized. To limit the negative effects on world trade, the efforts to reach a result in the negotiations should be increased.
Ecofin supports the two-stage approach to reform IMF's governance
The Ministers and Governors agreed on the key messages to be conveyed at the Annual Meetings of the Bretton Wood Institutions in Singapore. EU member states welcome the steps taken to implement the IMF's new medium-term strategy, including the ongoing work to review the basis of IMF surveillance and the Board of Governors' resolution on quotas and voice in the IMF.
- The member states noted that quota and related governance reforms recommended by the IMF Executive Board are in line with the joint EU position. It is important that the EU speaks with one voice in Singapore. It is recognised that a large number of IMF members, including both emerging market countries and some EU member states, are under-represented. We support the Managing Director's two-stage approach to reform the governance.
Useful insights from the EU wide financial market crisis management exercise
The Ministers and Governors continued their discussions on financial market development and stability issues. The main issue this time was the evaluation of the crisis management simulation exercise held in April 2006 to test the Memorandum of Understanding signed in 2005. The Ministers welcomed the exercise, which was successfully carried out by the banking supervisors, central banks and Finance Ministries of the European Union. The exercise confirmed that the existing voluntary arrangements in the EU have the potential to work well in a crisis situation. However, the exercise also gave a number of useful insights on how to further improve the management of cross-border financial crises and even further increase the overall financial market stability in Europe. For this purpose the ministers agreed on the direction of further work in this area.
Back to September 2006
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