EU to seek rapid progress on financial regulation

BRUSSELS – European Union leaders will call at a summit next week for rapid progress on agreeing and implementing new financial regulations to prevent another global economic crisis, a draft summit declaration showed on Wednesday.

The draft, prepared for the June 18-19 EU summit or Council in Brussels, showed the EU leaders would approve the creation of two new bodies to assess potential threats to financial instability and protect small financial firms and consumers.

The banking sector remains under stress and credit flows are still constrained, so governments should be alert to any need for further measures to stem the crisis, said the draft, obtained by Reuters.

“The European Council calls for rapid progress to be made in the field of regulation of (the) financial market, notably on the regulation on alternative investment funds and on improved capital requirements for banks,” said the draft conclusions.

“…The banking sector remains under stress and credit flows continue to be constrained. Governments must therefore stay alert to possible further measures which may be needed. Any further actions must be consistent with single market principles and take into account a credible exit strategy.”

The EU wants to show it is acting quickly to stem the crisis following a European Parliament election in which a number of governing parties suffered defeat over their handling of the economy.