Resolution of the Committee of the Regions on the financial crisis
Date: 2008-11-27
Institutions: European Committee of the Regions
Subjects: EU policy, European Committee of the Regions, European Globalisation Adjustment Fund, action programme, economic recession, legislative programme (EU)

31.3.2009

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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 particu-
lar 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 safe-
guard 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 transpar-
ency requirements and a state-of the-art and responsive system
of supervision at the appropriate levels of governance; under-
lines 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:

the agreement

3. welcomes
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,
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;

in spite of

approves the EU decision to increase minimum guaranties
4.
territory,
savings on the European Union's
citizens'
for
welcomes it as an accurate measure to safeguard savings of citi-
zens 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 objec-
tive 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,
the European
Globalisation Adjustment Fund in order to make this instrument
more operational;

including a review of

7.
supports recent initiatives by the Commission aiming at
amending directives regulating the financial markets with a par-
ticular 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 institu-
tions 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;

urges the European Commission to encourage the agree-
9.
ment 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;

urges that close attention is given to the levels of
in particular credit card debts, which are
leading to borrowers defaulting on their

11.
personal debts,
increasing fast
payments;

it

is composed of experts from financial

12. welcomes the appointment of a high level group on
Europe's financial market supervisory architecture and remarks
that
institutions,
national ministries of finance, banking and industry; regret-
tably, the local and regional governance levels are not repre-
sented in the De Larosière Group, consequently urges the
the
appointment of a representative of
Regions;

the Committee of

calls for a proper regulatory framework to be set with

13.
effective systems of rules and law enforcement devices;

institutions,

the international

calls for an overhaul of

increasing the transparency of

financial
14.
system,
financial operations,
reviewing the prudential or accounting norms applicable to the
financial
responsibility of
strengthening
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;

the

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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
local and
future economic growth;
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;

therefore insists that

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

and small

start-ups

urges

therefore

the Council,

the Commission and
17.
Member States to recognize the important role of
local and
regional level in the functioning of public financial intermedi-
aries; 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 finan-
cial crisis (1) and calls on the European Commission to closely
aid granted under
monitor
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;

consequences of

state

the

19. welcomes the agreement on a minimum guarantee of
savings of EUR 50 000 and calls for appropriate fiscal incen-
tives for the general public, which keep distortion of competi-
tion 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;

(1) COM(2008/C 270/02) — 25.10.2008.

supports the efforts of

21.
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

recalls that

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

underlines that

the financial crisis and its negative
23.
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;

urges special attention to financing capacities of local
25.
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 solu-
tions are not exposed to unnecessary risk of losing EU funding;

calls on the financial institutions, European authorities
27.
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;

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requests that

the co-financing quotas of

28.
local and
regional authorities — just as with ERDF and ESF quotas intro-
duced 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
freezing recruitment and cutting
(blocking access to loans,
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 finan-
cial 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 invol-
ving the EIB similar to those in support of SMEs, which would

Brussels, 27 November 2008.

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 circum-
stances, 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 invest-
ment in efficient technologies which would provide long term
economic recovery with sustainable environmental practice;

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

The President

of the Committee of the Regions

Luc VAN DEN BRANDE