EN Official Journal of the European Union C 76/63

Resolution of the Committee of the Regions on the financial crisis

(2009/C 76/13)

THE COMMITTEE OF THE REGIONS

1. is concerned about the serious social consequences of the financial crisis and its impact on the whole economy in particular for territories and citizens; consequently calls for decisive action to support the demand side of the economy, as well as measures to assist small and medium enterprises and local and regional authorities in order to maintain cohesion and to safeguard key investment and infrastructural projects;

2. gives its full support to the objective of a secure single financial market in the European Union based on high transparency requirements and a state-of the-art and responsive system of supervision at the appropriate levels of governance; underlines that measures and regulations which may strangle the financial market should be avoided and joint efforts targeted to guarantee a sound financial management, in order to restore confidence in the economy;

With regard to the EU initiatives to tackle and overcome the financial crisis, the CoR:

3. welcomes the agreement reached by the European Council on 15th and 16th October 2008 as a pre-condition to restore confidence in the financial markets, and considers that its decisions, in spite of incurring cost to the budgets and taxpayers, constitute important steps to rebuild trust within the financial sector and to limit the consequences of the crisis for the economy;

4. approves the EU decision to increase minimum guaranties for citizens' savings on the European Union's territory, welcomes it as an accurate measure to safeguard savings of citizens in the EU and restore confidence in the banking system in the short term without incurring neither extra costs to the taxpayers nor distortion of competition and supports the objective of avoiding bankruptcies among major EU banks;

5. appreciates Members states' announcement to dedicate 30 billion euro before 2011, through the European Investment Bank, to help small and medium sized enterprises in Europe, affirms however that this constitutes merely a first step to support the economy;

6. underlines the important role which the European Social Fund and programmes aimed at mitigate the negative effects of the present crisis and calls on the European Commission to explore the possibilities to adapt the existing instrument to the current circumstances, including a review of the European Globalisation Adjustment Fund in order to make this instrument more operational;

7. supports recent initiatives by the Commission aiming at amending directives regulating the financial markets with a particular focus on supervisory measures, risk management and crisis management and calls on the EC to take into account the role of local and regional authorities;

8. urges the European Commission to propose a Directive to harmonise the kind of information provided by financial institutions about financial products, setting an obligation to classify related risks in easily understandable ways, simplifying the contracts and setting straightforward transparency requirements for banking services;

9. urges the European Commission to encourage the agreement on a code of conduct to ensure financial institutions' profit driven activities are not in conflict with the general public interest;

10. affirms moreover that the consequences of the financial crisis for the economy should not alter the established long term political priorities of the EU, in particular: the support for more and better jobs, promotion of research and innovation, improvement of competitiveness, reinforcement of territorial cohesion and the fight against the causes and the effects of global warming;

11. urges that close attention is given to the levels of personal debts, in particular credit card debts, which are increasing fast leading to borrowers defaulting on their payments;

12. welcomes the appointment of a high level group on Europe's financial market supervisory architecture and remarks that it is composed of experts from financial institutions, national ministries of finance, banking and industry; regrettably, the local and regional governance levels are not represented in the De Larosière Group, consequently urges the appointment of a representative of the Committee of the Regions;

13. calls for a proper regulatory framework to be set with effective systems of rules and law enforcement devices;

14. calls for an overhaul of the international financial system, increasing the transparency of financial operations, reviewing the prudential or accounting norms applicable to the financial institutions, strengthening the responsibility of managers and limiting those provisions in the system which encourage excessive risk-taking (e.g. securitisation, remuneration policies); finally insists on a better coordination between the different national supervisory authorities on the supervision of transnational financial groups;

Local dimension of the financial system

15. recalls that LRAs are responsible for one third of public expenditure and more than two thirds of public investment in the EU and must therefore be considered as active actors involved in the solution of the crisis and for the preservation of future economic growth; therefore insists that local and regional authorities should be supported in their investment activities for example in infra-structure, in order to avoid a dangerous spiral of lack of investment — job losses — lack of credit and further lack of investment;

16. underlines that local and regional authorities are directly concerned by the financial crisis, as saving banks in many countries are firmly rooted in the regions; they are in direct proximity to the local people and businesses and contribute to the economic, social and territorial cohesion, acting as motors behind business start-ups and small and medium-sized companies;

17. urges therefore the Council, the Commission and Member States to recognize the important role of local and regional level in the functioning of public financial intermediaries; requests that LRAs are consulted at the stage of design and implementation of any new architecture of the EU financial system, in order to guarantee an exchange of experiences and the transfer of expertise bottom up and top down, for the benefit of the economy, SMEs and citizens;

Competition policy

18. welcomes the Commission's communication on the application of State aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis (1) and calls on the European Commission to closely monitor the consequences of state aid granted under Article 87(3)b to individual banks in order to make sure that such aid is kept to a necessary minimum and that distortion of competition is prevented;

19. welcomes the agreement on a minimum guarantee of savings of EUR 50 000 and calls for appropriate fiscal incentives for the general public, which keep distortion of competition to a minimum and guarantee a level playing field for all institutions of the financial sector These measures are important to regain citizens' confidence in the financial system;

20. suggests the revision of the rating system in order to create simple codes and/or categories to distinguish banks with prudent investment profile from those favouring risky practices; is of the opinion that for these purposes the setting up of a European Credit Rating Agency would be a very useful step;

21. supports the efforts of the European Commission towards the removal of all distortions in the internal financial market (Report on the retail banking sector inquiry of 31 January 2007) and the persisting fragmentation along national lines as well as differences in profit margins, pricing practices, selling patterns and information asymmetry; shares the European Commission's objective to complete the common financial market, which is more transparent, sounder and better able to respond to global challenges;

Budgetary issues

22. recalls that local and regional authorities are major policy and budgetary actors in addressing the challenges which are key for the next decades of Europe;

23. underlines that the financial crisis and its negative impact on economic growth and employment will increase demand for assistance, social aid, public services preferential tariffs, and local and regional authorities are in the front line regarding these expectations;

24. draws the attention to the foreseeable deterioration in the financing conditions for economic actors, including for local and regional authorities, which may consequently affect their capacity to borrow for new investments;

25. urges special attention to financing capacities of local and regional authorities and requests adequate support for LRAs where increased costs of financing and burden of debt endanger the timely execution of otherwise sound projects of value and importance for the Regions and the EU economy as a whole;

Cohesion policy

26. calls for the current period to introduce more flexibility as to the use of structural funds and promotes inter alia extra time for mobilising structural funds, from reference year plus 2 (N+2) to reference year plus 3 (N+3) with the aim to guarantee that quality projects that are expected to deliver efficient solutions are not exposed to unnecessary risk of losing EU funding;

27. calls on the financial institutions, European authorities and banks to allocate adequate financing and/or guarantees for infrastructural investments as well as innovative projects of proven quality contributing to competitiveness and efficiency; insists that consideration should be given to the fact that failure to conclude such investments on time would not only have a direct detrimental effect on the territories concerned and their SMEs but also negative consequences for EU industry, thus affecting economic growth and putting valuable jobs at risk;

28. requests that the co-financing quotas of local and regional authorities — just as with ERDF and ESF quotas introduced under the operational programmes — not be taken into account in the national stability pacts of various countries. This would enable local authorities to launch projects to foster the growth and development of local economies and the labour market without being penalised by the restrictions imposed in certain countries on local authorities that infringe the pact (blocking access to loans, freezing recruitment and cutting public funding);

29. proposes a closer institutional partnership between the CoR and the EIB, according to its objectives of strengthening of economic and social cohesion as set up by the provisions of the Treaty EC and, more particularly, its Protocol No 28 on economic and social cohesion;

30. supports the reform measures announced by the EIB on: simplifying lending access procedures; extending lending to intangible investment (licences, research, etc); sharing of risks between the EIB and the banks; and transparency of the financial benefits granted to SMEs; calls for a strengthening of the EIB intervention capacity for infrastructure projects, notably by making use of long-term investment funds (equities) to increase the EIB's clout; proposes finally to develop a mechanism involving the EIB similar to those in support of SMEs, which would be aimed at assisting LRA capacities to co-fund projects related to territorial cohesion;

A sustainable Europe

31. confirms the CoR's commitment to the climate goals and expresses its hope that the relevant targets will be met regardless of the economic difficulties; therefore, efforts should be made to mobilise European investments in renewable energy technologies through funding programmes (transport, buildings, etc) and financing of research, particularly in SMEs;

32. reasserts its commitment towards the achievement of a dynamic sustainable economic growth within a sound European social model, energy efficiency and reduction of environmental impact; states that, even under the present exceptional circumstances, these goals shall not be compromised neither by EU, nor national, nor local and regional authorities' action; on the contrary, urges the responsible actors to take a lead and convert the risks into opportunities by supporting research and investment in efficient technologies which would provide long term economic recovery with sustainable environmental practice;

33. instructs its president to forward this resolution to the European Commission, the European Parliament, the Council and the presidencies of the European Union.

Brussels, 27 November 2008. The President of the Committee of the Regions Luc VAN DEN BRANDE

(1) COM(2008/C 270/02) — 25.10.2008.