az európai unió hivatalos lapjában (2008.április ...single euro payments area 7th international...

Az Európai Unió Hivatalos Lapjában (2008.április) kihirdetett jogforrások listája, illetve a pénzügyi szolgáltatások szektorral kapcsolatban az Európai Bizottság honlapján közzétett hírek

Tartalomjegyzék: Az Európai Unió Hivatalos Lapja - L (Jogszabályok) Sorszám Cím Oldalszám

1. Az Európai Parlament és a Tanács 297/2008/EK rendelete (2008. március 11.) a nemzetközi számviteli standardok alkalmazásáról szóló 1606/2002/EK rendeletnek a Bizottságra ruházott végrehajtási hatáskörök gyakorlása tekintetében történő módosításáról

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Sajtóbejelentések Sorszám Cím Oldalszám

1. Charlie McCREEVY European Commissioner for Internal Market and Services Single Euro Payments Area 7th International EPCA Conference "Releasing the power of payments" La Hulpe, 1st April 2008

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2. Charlie McCreevy European Commissioner for Internal Market and Services Latest developments on policy response to financial turmoil European Parliament's Committee on Economic and Monetary Affairs Brussels, 1st April 2008

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3. Preparation of Eurogroup and Informal Economic and Finance Ministers Council, Brdo (Slovenia) 4 and 5 April 2008 (Amelia Torres, Oliver Drewes)

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4. Retail investment products: Commission publishes feedback statement on call for evidence

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5. Banking: Commission closes case against France over law on current account interest

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6. Charlie McCREEVY European Commissioner for Internal Market and Services International Developments in Insurance Regulation Financial Services Authority (UK) Annual Insurance Sector Conference London, 8 April 2008

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7. Post-trading markets: Commission encourages applications for new CESAME II Group

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8. Banking: Commission consults on amendments to the Banking Directives

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9. Charlie McCreevy European Commissioner for Internal Market and Services Making the best of SEPA National Payments Conference 2008 Dublin, 18 April 2008

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10. Charlie McCreevy European Commissioner for Internal Market and Services The Safety and Efficiency of Post-Trading Arrangements in Europe Joint EC/ECB conference on post trading Frankfurt-am-Main, 21 April 2008

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11. Accounting: Commission Services report on convergence efforts of key partner countries

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12. Amendments to Settlement Finality Directive and Financial Collateral Directive: Frequently Asked Questions (see IP/08/636)

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13. Securities markets: Commission proposes amendments to Settlement Finality Directive and Financial Collateral Directive (see MEMO/08/267)

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14 Financial services: payment security is key to improving consumer confidence in new payment services, says Commission report

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Jogszabályok 1. Jogszabály: Az Európai Parlament és a Tanács 297/2008/EK rendelete (2008. március 11.) a nemzetközi számviteli standardok alkalmazásáról szóló 1606/2002/EK rendeletnek a Bizottságra ruházott végrehajtási hatáskörök gyakorlása tekintetében történő módosításáról Megjelent: L 97 (IV. 9.) Hatályos 2008. IV. 10. A 2006/512/EK határozat értelemében olyan általános hatályú intézkedések elfogadásához, amelyek az alap jogi aktusok nem alapvető fontosságú elemeinek módosítására irányulnak a szabályozási bizottság ellenőrzéssel történő eljárása szükséges. Ennek megfelelően a rendelet módosításra került.

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A Bizottságnak szabályos időközönként értékelnie kell a ráruházott végrehajtási hatáskörökre vonatkozó rendelkezések működéséről, ennek megfelelően az irányelv kiegészült az ezt biztosító rendelkezéssel. Az Irányelvben tett módosítások technikai jellegűek, és csak a bizottsági eljárást érintik, azokat a tagállamoknak nem kell átültetniük. Ezért e célból nem kell külön rendelkezéseket megállapítani. Sajtóbejelentések 1.

SPEECH/08/161

Charlie McCREEVY

European Commissioner for Internal Market and Services Single Euro Payments Area 7th International EPCA Conference "Releasing the power of payments" La Hulpe, 1st April 2008

Ladies and Gentleman,

Thank you for inviting me to address you this morning on the subject of SEPA, the Single Euro Payments Area.

Today is April fool's day, but believe me, SEPA is not a hoax. We already have 4000 banks in Europe adhering to the EPC credit transfer scheme and a volume of more than 100,000 transfers a day.

But why is SEPA so important for Europe?

Let us go back a few years. I remember Sir Leon Brittan, a former EU trade Commissioner in the early 90s, telling the story about ordering a book costing around £10 from another Member State, but when the bank charges were added in the cost, it came to £30.

This is why SEPA is important for Europe: it brings concrete benefits for EU citizens! Today, a cross-border transfer can be executed at the same price as a domestic one: no more than a few Euro cents!

How does SEPA release the power of payments to the benefit of the whole European economy?

This distinguished audience of professionals knows it better than anybody: payments are essentially a volume-related business. The integration of national payment systems though SEPA will produce substantial economies of scale thus lowering payment processing costs.

It will also enhance competition by making cross-border competition for payments possible. Together, these will reduce the cost of payments to users. Major payment users such as corporates, public authorities, retailers and SMEs should benefit from improved business efficiency and reduced operating costs linked to payments. By facilitating cross-border payment, SEPA could have a dynamic impact allowing especially SMEs to reap the full benefits of the internal market. SEPA could also have a hugely positive impact on the integration of retail financial markets.

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Overall, SEPA will increase the competitiveness of European business and the financial sector, as well as bringing about the integration of payments markets in the EU, which was identified in 2000 as one of the key measures to achieving the goals of the Lisbon Agenda.

To quote a number: 123 billion euros in the next 6 years. These are the expected benefits of SEPA according to a study carried out by Cap Gemini for the Commission.

But the story does not end here: if we can use SEPA as a platform for e-invoicing, then a further 238 billion euros of savings could be achieved. In addition, SEPA could also be used as a platform for e-lending and trade financing. In the public sector, SEPA will, I hope, be used to drive e-Government and the development of transactional services in the areas of e-procurement, taxation, and customs.

Ladies and Gentlemen,

The future holds great potential, but there is still a long way to travel. I would like to take this opportunity to remind you also about the challenges ahead: SEPA migration, cards, additional optional services and SEPA governance.

First SEPA migration.

As far as migration is concerned, we need a realistic timeline for the full completion of the project. By completion I mean the widespread use of SEPA products by retail customers, SME’s, corporates and the public sector. SEPA migration started last January and the intention is that by 2010 a critical mass of payment instruments should have migrated. However, more clarity is required on what constitutes a "critical mass of payments" in order to avoid different interpretations of such a concept in each of the Member States.

Uncertainty about the end game for SEPA could easily become an excuse for delayed migration. But, the longer the transition period, the longer the period banks will have to bear duplicate costs, first-movers will be handicapped, and SEPA pricing as a whole will be suboptimal. This argues that a realistic timeline for phasing out old national payments products and migrating customers to the new SEPA products should be set up.

Public authorities represent nearly 50% of EU GDP and around 15-20% of all payments. Given the wider benefits to society, public administrations could and should play a major role in kick-starting migration.

In May of last year I hosted a major conference in Brussels to familiarise public authorities with the benefits of SEPA. Electronic payment services can enable the simple payment of various government fees, taxes and social benefits and SEPA could be used as a platform for e-Government.

However, the Conference showed that while public authorities strongly support SEPA, concern about the pricing and performance of SEPA products may, sadly, create a negative climate for early migration. But SEPA is a market-driven process, and in a market driven process, suppliers should persuade customers of the merits of new products so that migration occurs naturally.

Banks should espouse the non-deterioration principle, namely that the new SEPA products should have price/performance characteristics at least as good, and preferably better, than existing products. The ECOFIN, the Council of European Finance Ministers, has already highlighted its importance in its conclusions last year and the Commission will continue to monitor this issue and, at the same time, will strive to promote the role of public administrations in the timely and successful implementation of SEPA.

A second issue, which concerns me, is what happens to national debit cards.

Within SEPA, functionality will undoubtedly be expanded so that a card can in principle be used at any terminal in the euro zone. Unlike the comprehensive rule books for credit transfers and direct debits, the SEPA Cards Framework does not develop any detailed rules and standards, but rather describes three options for attaining SEPA compliance. There is a justifiable concern that under current market developments, this increased functionality could come at the cost of increased market concentration and the risk of a more expensive payment card for the merchant and consumer. At the heart of this issue is our concern that national card schemes should not be replaced by more expensive payment

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card schemes, using SEPA as some sort of pretext for increasing prices. More competition in the EU payment cards landscape should mitigate against such tendencies.

A first decisive step has been taken by the Commission last December, with the prohibition decision addressed to Mastercard regarding MIF for cross-border payment card transactions with MasterCard and Maestro branded debit and consumer credit cards in the European Economic Area (EEA). The Decision found that Mastercard's MIF inflated the costs of card acceptance by retailers, since the MIF accounts for a large share of the final price companies pay for accepting Mastercard's payment cards, without leading to proven efficiencies.

Let me be clear on one point Ladies and Gentlemen: the Decision did not conclude that all MIFs are illegal per se. However, Mastercard could not demonstrate that its MIF contributed to objective efficiencies, meaning technical and economic progress, or that it benefited consumers.

I have, of course heard some voices who say that this Decision is jeopardizing SEPA, even killing it. I reject that. In fact, the Mastercard Decision supports the SEPA project in two ways:

Firstly, it obliges Mastercard to refrain from implementing its new "SEPA" interchange fees for the euro zone. This ban will ensure that SEPA does not lead to permanent price increases linked to payment cards.

Secondly, as a consequence of the Mastercard Decision, there will be better conditions for new schemes to compete with incumbents, as the current MIF practice has to change. Last week my colleague Neelie Kroes also opened an investigation into VISA's MIF.Of course, as regards the possible emergence of new schemes, I fully recognise that where market players are called upon to make fresh investment to create a new network, clarity on possible business models and a MIF that is compatible with EU competition law is crucial.

The need for clear communication is obvious. In response, the exceptional step of publishing a provisional non-confidential version of the Mastercard Decision has been taken. But this is not the end of the story, as we will of course continue our dialogue with the industry in order to make sure that there is sufficient clarity and legal certainty in the market.

There also needs to be further progress on standardisation to allow for a greater variety of card schemes on the European market. Therefore, I very much welcome the recent work initiated within the EPC on the development of card standards and urge its rapid completion.

The third issue I wish to touch on is Additional Optional Services.

These will play an important role in the future European payments market and are vital for the SEPA “business case” of many institutions. Payment services will become increasingly commoditized and banks will need to develop new sources of revenue by the provision of add-on-services, such as e-invoicing. But, the risk is that the provision of these services may lead to new, national fragmentation and the economies of scale and the massive productivity gains that could be achieved by their development at EU level may not be attained.

Additional Optional Services are not described at length in the EPC Rulebooks as they are considered part of the competitive space. However, I think the EPC could consider providing the industry with clear ideas for the development of AOS (beyond the core SEPA services), addressing the need for interoperability and preventing fragmentation.

The fourth and final issue is SEPA governance.

The Commission attaches great importance to the governance arrangements for the European payments market. If users cannot participate effectively in the SEPA governance arrangements, then it becomes doubtful whether the current and future needs of users will be adequately met on a timely basis. This is vital for a complex project such as SEPA, which involves so many different end-user groups in various countries. The creation of the stakeholders' forum by the EPC is clearly a move in the right direction, but how this user consultation is incorporated into EPC decision-making may need further reflection.


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You have already achieved much but more remains to be accomplished if SEPA is to become the world-class payment system that Europe's citizens and businesses deserve. As regulators, we can only try to provide a level playing field and a framework for competition. I am sure you have the capacity, skills and determination to make this opportunity a reality.

Thank you for your attention.

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SPEECH/08/162

Charlie McCreevy

European Commissioner for Internal Market and Services Latest developments on policy response to financial turmoil European Parliament's Committee on Economic and Monetary Affairs Brussels, 1st April 2008

Madam Chair, Honourable Members,

Ahead of the latest ECOFIN Council I would like to brief you on the latest developments related to the policy response to the financial turmoil, as well as the Lamfalussy review and the issue of supervisory convergence. I welcome the opportunity to hear your views on these issues before our discussions in Ljubljana on Friday and Saturday. I will also touch upon EU/US relations.

1. Policy response to the financial turmoil

During the past months, the nerves of financial markets have been put to the test. We have witnessed the rapid and dramatic collapse of the fifth largest US investment bank. The end of one of the best performing hedge funds in the UK in 2007. High volatility in the markets, especially in the banking sector. And dramatic liquidity moves from various central banks. The situation has deteriorated and pressure has increased in the markets.

The issues are known: weak internal valuation models, opaque securitization process, business models that were built upon disproportionate maturity mismatches between assets and liabilities, weak internal controls and poor disclosure standards, to name but a few.

During the last Spring Council, EU leaders concluded that while primary responsibility to deal with such issues remains with the private sector, authorities are to be prepared to take regulatory and supervisory actions where necessary. They also called for a prompt disclosure of all losses by banks and other financial institutions. I fully agree. Full disclosure is absolutely essential if we want to restore confidence and avoid a "drip effect".

In addition, EU leaders identified four key areas of work for the weeks and the months to come. These fully reflect the priorities set out in the Autumn 2007 roadmap:

First, enhancing transparency for investors, markets and regulators, in particular on exposures to structured products and off-balance sheet vehicles. Here, we have asked the industry to come forward with a credible, comprehensive proposal, answering the needs of regulators. So far the first signals are encouraging. By mid June, the industry should bring forward complete data on markets for structured products. Thereafter, this data should be updated and made available regularly.

Second, improving valuation standards, in particular for illiquid assets. This work is done at international level. It has recently intensified. We are happy to hear that the International Accounting Standards Board (IASB) will present a discussion paper including considerations on fair value measurement this month. In May, a task force of the International Organisation of Securities Commissions (IOSCO) will also present its findings. This is good news. We will continue to closely monitor progress.

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There is a growing debate on whether fair value and mark to market measurements may have aggravated the crisis by bringing pro-cyclicality in financial statements. I want to make it clear that I believe that there are some real accounting issues and anomalies to examine, including the interface with the Capital Requirements Directive, such as the consolidation of special purpose entities or the measurement and information disclosed on risk exposures. Clearly, these and other issues –such as the impact of mark to market valuation when markets generally become illiquid and irrational- must be thoroughly analysed.

Third, improving the market's functioning and its incentives structure. Potential conflicts of interest, in particular in the case of credit rating agencies, are an issue. If the industry does not come up with satisfactory responses, we will consider regulatory alternatives. In particular, they need to strengthen the way potential conflicts of interest inherent in their business models are managed with oversight of the structured rating process by people who are free - and seen to be free – from any conflicts of interest by way of share options, appointment terms or otherwise. The Commission should be in a position to finalize its assessment before the summer break, once the final position of the industry is known, and once the assessments from the Committee of European Securities Regulators (CESR), the European Securities Markets Expert Group (ESME) and IOSCO are available.

Fourth, we need to reinforce the prudential framework and risk management in the banking sector through a targeted revision of certain aspects of the Capital Requirements Directive (CRD).

Proposals for changes to the CRD will include:

• new rules to limit the risk stemming from large exposures, • a harmonisation of the definition of hybrid capital, • capital requirements for default risk in the trading book, • a definition of the significance of risk transfer, • technical changes to the securitisation framework, • a series of changes to ease the administrative burden.

The Commission is working closely with other stakeholders to ensure that a proposal is adopted by early autumn. I welcome the statement of the European Council two weeks ago in which it gives full backing to the project and underlines the importance of striving for an agreement between the Council, European Parliament and Commission by April 2009. A failure to do so would imply substantial, and from a market's perspective unacceptable, delays in waiting for the inception of the new Commission and Parliament.

I call on the European Parliament to make a similar statement; citizens need to understand that we can collectively make real progress on such important issues.

The implementation of the overall roadmap is progressing well, but recent events have added a greater sense of urgency to our work. In the months to come, it will be crucial to stick to the timetable and show that the EU is responding to the crisis effectively and in a coherent way.

2. The Lamfalussy roadmap and the issue of supervisory convergence

The turmoil has shown that we need to improve and strengthen the EU toolbox for the supervision of financial groups. It is also clear that much work is needed to ensure effective cross border crisis mechanisms and decision making. We need to build up an EU capacity for financial crisis prevention, management and resolution. The way forward was agreed at the end of last year and has been endorsed at the Spring Council. We should bear in mind that the cost of the banking crisis can be staggeringly high. Just look at past examples: around 8 per cent of GDP in Finland in the early 90s, almost as much in Sweden. So we need to advance.

The majority of the initiatives in this field need to be implemented during 2008 and require actions from the Commission, the Parliament, Member States and the Level 3 Committees. An important review of progress is planned for the upcoming informal ECOFIN meeting on 4 and 5 April. We want to hear your views and engage with you on all aspects of this work.

One of the most urgent tasks is to clarify and strengthen the role of the Level 3 Committees. We must clarify the responsibilities of the Level 3 Committees and that the Committees must be properly equipped to assume these.

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The Commission has been exploring this issue thoroughly over the past months. We have presented our thoughts in a paper as preparation for this weekend's informal Council meeting. Copies have been presented to this committee. We believe four options can be envisaged. Let me briefly recall their essential elements:

• The first option would be to simply give the Level 3 Committees a set of minimum, general responsibilities in the area of supervisory cooperation and convergence. This would be achieved by aligning the Commission Decisions which created the Level 3 Committees.

• The second option would be to modify the Commission Decisions in order to include an indicative (i.e. non-exhaustive and flexible) list of activities that the Level 3 Committees should perform to foster greater supervisory cooperation and convergence.

• The third option would be to combine option 2, where necessary, with some targeted modifications to the relevant level 1 directives.

• Under the fourth option, the co-legislators would create European regulatory agencies, which would replace the Level 3 Committees. Under this scenario, these agencies could adopt individual technical decisions applicable to market participants.

These options should come as no surprise to you. They reflect the ongoing debate on the future of the Level 3 Committees. Neither is the fact that the Commission considers option 3 the most pragmatic way forward.

We believe that modification of the Decisions establishing the Level 3 Committees (to make them consistent and to give the L3 Committees more specific tasks to foster greater supervisory cooperation and convergence) and the amendment of the relevant directives provides the most practical solution for clarifying and strengthening the functioning of the Level 3 Committees without exceeding the December 2007 ECOFIN conclusions.

By contrast, seeking to transform the Level 3 Committees in a single or in separate agencies would be highly controversial and divisive. It would risk paralyzing the quick and practical progress that is so urgently needed. Furthermore, the real added value of this option remains to be demonstrated.

In addition to the clarification of the role of the Level 3 Committees, we believe that to improve and strengthen the EU toolbox for the supervision of financial groups, we need to come forward with bold, but also pragmatic proposals.

We hear some voices arguing that the European Union should respond to the current financial turbulence with more legislative actions and criticising the Commission for not assuming properly its right of initiative. I believe this impression is based on a false assumption.

• Recent events show that systemic risks are the most acute in the banking sector. This is why the changes we will table for the Capital Requirements Directive in early autumn will put colleges of supervisors on a firm legal footing. The objective will be to foster greater supervisory cooperation, with an emphasis on crisis prevention and the development of contingency plans.

• In the insurance sector, the Solvency II proposal is at a more advanced stage. Its adoption is expected by the end of 2008. It contains the necessary provisions to enhance the role of the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS). CEIOPS should for example play a large role in promoting supervisory convergence, and in the collection and publication of data. It would also have a mediation role between supervisory authorities in a group context in specific circumstances.

Adopting each of these proposals would already constitute substantial progress.

Further legislative measures may turn out to be necessary to address other current concerns. At this stage, however, we have to gather evidence and apply a bottom-up approach. There is major work ongoing to review supervisory and sanctioning powers, voluntary delegation of tasks, supervisory cooperation and exchange of information. The general contribution of the three Level 3 Committees to the preservation of financial stability will also have to be examined. We need more effective, more operational committees. We are reflecting on all options.

The current turmoil shows that early warning systems need to be strengthened. We agree that the international part of this work should be carried out by the IMF/FSF at global level. It is however also necessary to make parallel improvements to early warning arrangements within the EU, involving

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central banks, especially the 3L3 committees, ministries of finance and the Commission. A similar reflection should be carried out for crisis management.

I look forward to hearing your views on these issues.

3. EU-US regulatory dialogue

At the end of January, I was in the United States to discuss issues relating to the financial turmoil and other ongoing files with my US counterparts.

On the turmoil, one lesson of the subprime crisis is that inadequate regulation of mortgage selling and ratings in the US had a powerful contagion effect on the entire international financial system. The key lesson is that poor regulation in one part of the world can strongly reverberate on others. As a result, we need more regulatory and supervisory coordination and cooperation at international level, not less, and in many more financial sectors.

I welcome the fact that the recommendations of the President Working Group on Capital markets released two weeks ago are strikingly similar to the EU roadmap. I also note that work at international level is seen as a priority on many issues. This is a good signal. Our capital markets and our economies are inextricably linked, so we need to work together.

As you know, I support the idea of ‘mutual recognition’ in the field of securities. If we can get the conditions right, the rewards could be immense. This would also be a much needed show of confidence and would help to restore trust in the markets. So the substantial progress made in the recent months on the US side is a very positive development. I welcome in particular last week's public confirmation that the SEC will work with the Commission and CESR to develop a framework for mutual recognition. The coming months will be crucial. We will keep you fully informed of subsequent developments.


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MEMO/08/203

Brussels, 3 April 2008

Preparation of Eurogroup and Informal Economic and Finance Ministers Council, Brdo (Slovenia) 4 and 5 April 2008 (Amelia Torres, Oliver Drewes)

EUROGROUP (AT)

Eurogroup ministers will meet at 9:30 hrs on Friday 4 April. Joaquín Almunia, Commissioner responsible for Economic and Monetary Affairs will attend as willl European Central Bank Governor Jean-Claude Trichet. A press conference is scheduled to take place after the meeting. Ministers will discuss the economic situation and outlook on the basis of the latest developments in real and financial markets. For the most relevant and latest economic statistics concerning the euro area consult the April 1st update of the Key Indicators for the Euro Area on:

http://ec.europa.eu/economy_finance/db_indicators/db_indicators9237_en. For the latest Commission analysis of the economy see the Quarterly Report on the Euro Area published on 26 March (IP/08/466 and report itself on http://ec.europa.eu/economy_finance/index_en.htm).

The Commission's next economic forecast, the spring forecast, will be published on 28 April.

Ministers will also prepare the G7 meeting of 11 April and the Spring meetings of the International Monetary Fund and World Bank which will take place the following two days (see Ecofin section below)

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Eurogroup ministers will also have their usual budgetary policy debate at this time of the year – so-called Medium-Term Budgetary Discussion – ahead of the preparations of next year's national budgets. Germany and the Netherlands are generally first to start budgetary preparations.

ECOFIN COUNCIL

The Informal Council of Economics and Finance Ministers will start around 13:00 hrs with a working lunch on Friday 4 April. The afternoon session will start at 14:45 hrs. and should run to 18:00 hrs. The meeting will continue the following morning, Saturday 5 April, from 9:30 hrs to 12:30 hrs. The European Commission will be represented by Commissioner Joaquín Almunia and Internal Market Commissioner Charlie McCreevy. A press conference is expected to take place at the end of the meeting.

Western Balkans (macro financial situation and financing issues) (AT-KN)

Over lunch, ministers are due to address the macro-financial situation in the Western Balkans and to follow-up to the June 2006 European Council conclusions regarding a finance facility for the region. The Council then welcomed the intention of the Commission to extend and intensify its cooperation with the European Investment Bank and the other international financial institutions in the Western Balkans, with a view to taking appropriate measures aiming at a finance facility for the Western Balkans. The Presidents of the European Investment Bank and of the European Bank for Reconstruction and Development, respectively Philippe Maystadt and Jean Lemierre, are expected to attend. For recent background on EU financial assistance to the Western Balkans see MEMO/08/144 of 5 March 2008.

Economic situation and financial stability (AT)

The afternoon session of Friday is expected to be entirely devoted to the economic situation and to issues related to financial stability. Ministers are also likely to discuss the impact of soaring food and oil prices on consumer price inflation.

In line with the conclusions of the Spring European Council, the Ministers and Central banks governors will pay particular attention to financial markets and risk assessment and will review the policy actions to address them. In particular, they will review the state of play of the implementation of the roadmap agreed at the ECOFIN of October 2007 to address the issues raised by the financial turmoil.

Financial stability, supervisory arrangements and management of cross-border crisis (0D-AT)

Financial market infrastructures (OD)

Financial stability and supervisory arrangements

Still in line with the conclusions of the Spring European Council, the Ministers and Central banks governors will discuss the issue of financial stability and supervisory arrangements and the management of cross border financial crisis situations. Emphasis will be put on the two ECOFIN roadmaps dealing with these issues and their implementation (i.e. the October 2007 ECOFIN roadmap on the enhancement of the arrangements for financial stability in the EU and the December 2007 ECOFIN "Lamfalussy" roadmap).

Financial infrastructure

Ministers and Central banks governors will review the current state of play on the main issues in this file (namely Code of conduct on clearing and settlement, Target 2 securities, removal of 'Giovannini barriers' and way forward on requirements on safety and soundness).

Quality of public finances - efficiency and effectiveness of social spending (AT)

The informal ECOFIN will continue its discussions on how to improve the quality of public finances. Previous discussions focused on the role of national fiscal rules and institutional arrangements in meeting budgetary targets, supporting fiscal consolidation and improving the efficiency of public expenditure. In October 2007, the Council highlighted the importance of the modernisation of public administration for enhancing competitiveness, delivering better services, achieving better value-for-

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money and ensuring the control of government expenditure. In previous occasions, ministers called for improved systems to measure efficiency and evaluate reforms in the public sector, and for developing the analysis of the quality of public finances, including the efficiency and composition of public expenditure. This time they are expected to focus on the efficiency and effectiveness of social spending, a necessary condition to be able to maintain the current high levels of social protection and to secure the long term sustainability of European social models. Over the coming decades, Europe’s population will grow smaller and significantly older with a resulting fall in potential growth rates at the same time that ageing-related expenditure will rise. This will put a disproportionate burden on the working population as there will be only two people of working age per pensioner as opposed to a ratio of four to one at present. Member States have started to address the challenge by reforming their pension systems, embracing structural refoms to raise growth potential and increasing employment levels (see IP/06/150 and IP/06/1356 and accompanying reports on ageing and its impact on public finances). Globalisation and rapid technological change will also contribute to increasing the pressure on the social spending component of public budgets and the potential demands for insurance of new risks. Against this backdrop, and in view of the size of social expenditure in public budgets, Ministers will look at the main elements underpinning efficient and effective social spending and will propose some directions for efficiency-enhancing reforms, building upon recent national experience in modernising welfare-related public expenditure.

Preparation of the Washington Spring meetings (AT) Ministers will hold their traditional discussions to prepare for the forthcoming Spring Meetings of the IMF (12-13 April 2008). The discussion is set to focus on the recent preliminary agreement on the reform to overhaul the IMF's quota and voice that Ministers will vote upon within the next month (for the preliminary agreement go to: http://www.imf.org/external/pubs/ft/survey/so/2008/NEW032808A.htm.

The agreement foresees an increase in the voice and representation of emerging market and developing countries. EU Member States will contribute to this reform by accepting a reduction in their aggregate quota and voting share. Ministers will further focus on the financial situation of the IMF. In view of the IMF's falling income, the institution is in the process of cutting its expenditure and of reorganising its activities in line with its priorities. Ministers will discuss proposals on how to strengthen the income side of the IMF.

4.

IP/08/500


Retail investment products: Commission publishes feedback statement on call for evidence

The European Commission has published a feedback statement summarising the 80 responses received to its call for evidence on "substitute" retail investment products. The call for evidence invited views on whether differences in EU rules on the transparency and distribution of retail investment products – including investment funds, unit-linked life insurance products and structured securities – give rise to material differences in the level of regulatory protection for retail investors. It also invited opinions on whether action was needed at EU level to respond to any identified weaknesses. The feedback statement summarises the wide range of views expressed. The Commission will continue to gather opinion and evidence on these issues. The next major milestone will take the form of an open hearing to be held in Brussels on 15 July 2008. The Commission will publish a Communication in autumn 2008 in which it takes an opinion on whether there is a need for further work in this area.

Internal Market and Services Commissioner Charlie McCreevy said: "Taken together, investors have allocated over € 10 trillion to the main families of retail investment product. It is incumbent on us to ensure that the regulatory framework supports the continued successful development of these markets. This is all the more so, at a time when consumers are required to take greater responsibility for their financial futures, notably for retirement provisioning. The call for evidence is an important first step in assessing the overall coherence of rules that have sprung up in a piecemeal way. The depth and quality of the 80 written submissions received are impressive. Stakeholders have provided a solid base of evidence and opinion. We will continue to gather evidence from a wide range of stakeholders before forming a view on the existence of risks or the need for action of any kind."

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The call for evidence invited evidence and views on the existence of a real and significant risk to investor protection arising from variations in rules on product transparency and distribution that apply depending on the status of the retail investment product (including investment funds, structured securities, unit-linked life insurance, etc.). The feedback statement provides a high-level synthesis of the 80 written submissions received from 21 countries, including 17 European Union Member States.

Stakeholders differed widely in their assessment of whether different sectoral rules on product transparency and distribution gave rise to investor protection concerns. Responses from all consumers, many public authorities and some industry sectors revealed concern that these differences may give rise to risks to investors. However, many industry participants argued that the protections built in to existing EU rules - in combination with national rules and self-regulatory initiatives - provide a robust framework for investor protection and are well-tailored to different product types.

It was noted that important EU legislation – MiFID and Insurance Mediation Directive – have only recently entered into force and should be given their chance to prove their worth. The feedback statement also summarises the wide spectrum of views on whether corrective action is needed at EU level – or whether it is sufficient to rely on national or self-regulatory initiatives to complement EU legislative provisions.

Further intensive consultation and evidence gathering with all interested stakeholders will take place in the forthcoming months. As part of this consultation process, a public hearing will be held on 15 July 2008 in Brussels. Commissioner McCreevy will deliver the keynote speech. The programme and registration details will be published shortly.

Views expressed at the public hearing, together with the evidence gathered during the consultation process, will contribute to a Communication on retail investment products that the Commission will present to the Council and Parliament in autumn 2008. This Communication will consider whether there is evidence of a significant risk of investor detriment and whether there is a need for further work in this area. The feedback statement, together with all contributions authorised for publication, is available at:

http://ec.europa.eu/internal_market/finances/cross-sector/index_en.htm#product

5.

IP/08/506


Banking: Commission closes case against France over law on current account interest

The European Commission has decided to terminate an infringement procedure against France as it has now completely abolished its legislation ('Code Monétaire') that formally prohibited banks from offering interest on current accounts to their customers.

The Commission's original decision to pursue infringement proceedings in this case follows on from the ruling of 25 October 2004 ('CAIXA Bank', C-02/442) by the European Court of Justice, which held that legislation such as that in force in France impeded access by EU banks to the French market. The deposit of funds by the public represents one of the basic activities in the banking sector, and the prohibition on paying interest on current accounts deprived EU banks of an instrument that could otherwise help them acquire new customers without the need for a well-established commercial network (IP/06/434). In 2007, the Commission decided to refer the matter to the European Court of Justice (IP/07/352).

The issue has now been settled. France abolished all legal provisions that had introduced and specified the restriction for banks to pay interest on current accounts. Initially, only two of the three relevant Articles had been abolished, permitting banks operating in France to offer interest payments to their customers (IP/07/352). However, there was still a legal basis for fixing the interest rate in question. Now, the entire set of restrictions has been abolished. The latest information on infringement proceedings concerning all Member States can be found at:

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http://ec.europa.eu/community_law/index_en.htm

6.

SPEECH/08/185

Charlie McCREEVY

European Commissioner for Internal Market and Services International Developments in Insurance Regulation Financial Services Authority (UK) Annual Insurance Sector Conference London, 8 April 2008 Ladies and Gentlemen,

Thank you for inviting me to speak here today.

I have been asked to give the perspective of a European regulator on international developments in insurance regulation. As you are aware, much of the regulation in the UK, and in other member states, is influenced by the European Union. Financial services are central to the creation of the Single Market and play an important role, not only for the European economy but for society as a whole. In the UK, the financial services industry is a major contributor to the economy. The insurance market in the UK is the largest of any Member State and has strong international links. The insurance initiatives taken in the EU as part of the FSAP have allowed us to bring some harmony to an area where important differences in regulation and practices existed. These differences made it difficult for the insurance industry to benefit from a single internal market.

The most recent measure to enter into force at European level is the Reinsurance Directive. In most Member States, there was no prudential regulation for reinsurance. The adoption of this Directive and the abolition of the collateral requirement within the EU and the inclusion of provisions on mutual recognition with third countries have greatly contributed to the international debate on how best to regulate a market as global as reinsurance. Although I regret that little progress has yet been achieved on these issues in our discussions with the US, there is no doubt that the debate on a common prudential approach to reinsurance at an international level is now firmly on the agenda.

Motor insurance is an example of an area in retail insurance where much work has taken place. This area attracts a great deal of interest from industry, from consumers and from governments. Five Directives have been adopted on motor insurance. With their focus on the protection of victims and the resolution of cross-border problems, these Directives have set the scene for the way in which motor insurance is dealt with in Member States. They have also attracted a great deal of interest from countries outside the EU.

These are just a few of the legislative initiatives, which have improved the functioning of the Internal Market for insurance.

Let me now turn to the future.

Our main forthcoming initiative is of course Solvency II. Whilst there are already solvency requirements at EU level, many member states have chosen to supplement these with their own additional requirements. This has resulted in a distortion of the Internal Market. Solvency II will introduce new risk-based solvency requirements to insurers and reinsurers. A true level playing field will be established. Solvency II will bring tangible benefits to both industry and consumers. We need to ensure that the EU insurance industry remains competitive and that our policyholders are protected.

Solvency II will bring about a fundamental change in the prudential regulation of insurance and reinsurance. The impact on all countries will be considerable but will vary between countries. The UK

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has led the way in risk-based regulation and, of course, already has a risk-based capital requirement, the ICAS. This is in many ways very similar to Solvency II.

But Solvency II goes further. For example, there are increased disclosure requirements under Solvency II. Therefore, while the impact on the UK will likely be less than in other member states, which will have to completely transform their prudential regulation, there is still plenty of work to do when it comes to implementation, both for the FSA and the industry.

The Solvency II Project is at an exciting stage at the moment. The negotiations in both the Council and in the European Parliament are ongoing. The key priority for me and my Services is that the Proposal is not compromised. The Level 1 Framework Directive has been subjected to a full impact assessment. The economic risk-based approach set out in the Directive was shown to be the best option. We should therefore follow it. We must not make substantial changes, otherwise we risk losing the benefits we expect Solvency II to bring.

The changes proposed by Solvency II will be beneficial for industry and for all stakeholders, which was clearly shown in the impact assessment. We now need to reach agreement. In my view, it should be possible to settle all remaining issues during the course of this year. All parties concerned have so far respected the tight deadlines and I hope that this will continue to be the case. This project is too important to fail and will set the scene for the rest of the world. This is especially true in the context of the current turmoil. Member States and the Parliament must show that they are able to agree on adequate prudential standards to protect policy holders.

In particular, we need to agree on group supervision and the group support regime. It is widely acknowledged that the way that groups are supervised at the moment is not adequate. International groups transcend national borders – how can they therefore be supervised by regulators who are confined within national borders?

The current financial turbulence clearly showed how little national borders matter in the financial sector – even when only the US subprime market coughs, the rest of the world catches a cold . Whilst the insurance industry has not been affected in the same way as the banking industry, the vulnerability of financial markets has clearly been expose. We need our supervisors to be better equipped to deal with the international nature of financial markets.

Under Solvency II a group supervisor is appointed with distinct rights and responsibilities. This supervisor is responsible for coordinating the supervision of a group. This does not mean that the local supervisors will no longer have any powers.

Nor does it mean that countries with many head offices of groups, such as the UK, will become a kind of super-regulator. Even under the group support regime, local supervisors retain the control over the Minimum Capital Requirement. It is the breach of the MCR rather than that of the Solvency Capital Requirement that triggers ultimate supervisory action – the closing down of an undertaking.

The major advantage of the new system for all supervisors is a better flow of information. Due to the cooperation, collaboration and information exchange requirements set by the Solvency II Proposal, all supervisors should gain a better understanding of the whole group.

Many details of Solvency II have not yet been decided. As you know, the Directive is adopted under the Lamfalussy process. In addition to the Level 1 Framework Directive further details will be determined by Level 2 measures.

To go back to the issue of impact on the UK, I want to emphasise the importance of stakeholder input. Stakeholders really can influence the development of Level 2 measures, and therefore the future impact of Solvency II. I strongly encourage you to participate in the Fourth Quantitative Impact Study, which will run until July. This is your best chance to influence the development of Level 2 measures.

I should emphasise that it is not only the forthcoming EU legislative initiatives that will have an impact on the UK market. Equally important are those areas where we, after consultation and careful analysis, decide not to take legislative action but to pursue other routes or not act at all. We will only take the route of legislative action if this is clearly proven to be the best option and if it adds value.

There are many areas where the Commission is undertaking work through other means.

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Last year we published our communication on the Single Market Review. As part of this review, we looked at retail insurance issues. We found that integration in retail insurance markets appears not to have yet reached its potential. A product offered to consumers in one market cannot, in many cases, be offered in another market without costly adaptation to local requirements. This, of course, is not what we are aiming for. At the same time, we need to accept that attachment to local providers remains very important. Often consumers want their provider to be based in the same country, for example because they prefer customer service to be in their language or because they want a product that is tailored to the local market.

We intend to undertake several different strands of further work. We will look at the use of national general good requirements and to what extent they comply with the criteria set by the European Court of Justice and the Commission Interpretative Communication of 2000. An inventory of national general good requirements will be made and possible cases of abusive or excessive enforcement will be discussed with the Member States. In addition, we intend to further explore the reasons for relatively large price differences between the Member States both for the most important retail insurance products such as motor insurance and property insurance. This may enable us to identify and propagate best practices regarding the reduction of the cost of claims.

Another topical issue at the moment is the potential extension of Solvency II to pension funds. There is a great deal of interest in this from member states and from the pension fund industry. I know that this is particularly the case in the UK due to the structure of the UK pensions system. Pension funds will clearly be a key area for us this year, not for action but for reflection. The Directive on Institutions for Occupational Retirement Provision, the IORP Directive, has now been implemented by all Member States. In order not to slow down the finalisation of the Solvency II Proposal, it was agreed with Member States to come back to the issue of possible extension of the new solvency regime to pension funds in 2008 in the context of a review of the Directive. In order to prepare the discussion, CEIOPS is presently examining the existing solvency rules for pension funds. The CEIOPS' report will be published in April.

We cannot, at this stage, commit ourselves to any specific action. Pension fund regimes in the member states differ greatly and we will take these differences into account. We must ensure that whatever we do does not have the outcome of incentizing employers to close down defined benefit pension schemes altogether.

Lastly I would like to mention the Insurance Mediation Directive, the IMD. This Directive has now been transposed by all member states. However, full transposition was only achieved recently despite the transposition deadline of 15th January 2005. I know that there are calls for amendments of the IMD from the UK. My view is that amendments could only be considered if there is a proper examination of the issues. We need to follow our Better Regulation agenda and have a full impact assessment and extensive consultation. It is not the right time for this. The CEIOPS Working Group on insurance intermediaries agreed with the Commission that no immediate legislative changes to the Directive are necessary.

At the moment we need to complete the checks on the transposition of the Directive. Whilst all countries have notified us of transposition, we have also received three complaints on wrongful transposition in three countries. More work therefore needs to be undertaken on this. The focus now is on thorough implementation and on enforcement. A review could however take place at a later stage. Still, I must stress that a review of the Directive does not mean that there will be legislative changes.

I hope this presentation has given you a good overview of what to expect from the EU in the near future. It has been a pleasure speaking here today. The Single Market is at the heart of the EU's work. Financial services are a crucial part of the Single Market. Over the years we have taken many steps to improve the functioning of the Single Market for insurance. This has given tangible benefits to European insurance industry and consumers, in terms of access to markets, ease of conducting business, greater product choice and lower prices. Although many milestones have been reached, there is still more work to be done. The Solvency II Project is our key priority for the coming years. It will have a wide-ranging impact on all the EU member states and perhaps even further.

I wish you an enjoyable conference.

7.

IP/08/543

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Post-trading markets: Commission encourages applications for new CESAME II Group

The European Commission is to create CESAME II, a follow-up group to the successful Clearing and Settlement Advisory and Monitoring Experts' Group (CESAME; IP/04/935). The new group will, in particular, continue CESAME's work on dismantling the barriers to cross-border post-trading activities, continue co-ordinating the work on establishing common standards in this area as well as monitor their implementation. The group will be composed of practitioners and market participants who are knowledgeable in the post-trading field, i.e. the European and their domestic legal framework, as well as market setup and practices, and are therefore best placed to identify problems and, where applicable, propose (and implement) solutions to remove them. Interested candidates are invited to send an application to the Commission by 30 May 2008.

Functions of the expert group

CESAME II will have two functions. Firstly, it will help to support the aim of efficient post-trading arrangements by way of discussion, dissemination of information and transparency. Secondly, it will ensure coherent action by continuing CESAME's work on dismantling the Giovannini barriers as well as other identified obstacles, monitoring implementation of the solutions developed by the industry, and overall monitoring of developments in the post-trading area. The terms of reference for the group's constitution and operation can be found in its mandate.

Membership criteria

The group's members shall be high-level practitioners with legal or commercial experience in the areas covered by the mandate of the group. Interested candidates - including those from the public sector (except observers from relevant EU institutions, i.e. the ECB and CESR) - are invited to send an application to the Commission by 30 May 2008 according to the requirements set out in the Call for expressions of interest. The Commission will then appoint the members of the group based on the candidates' qualifications and skills. The Commission will decide on the final composition of the group in June 2008. Once the members have been selected, a full list of their names will be published.

More information is available at:

http://ec.europa.eu/internal_market/financial-markets/clearing/cesame_en.htm

8. IP/08/583


Banking: Commission consults on amendments to the Banking Directives

The European Commission has launched a public consultation on possible changes to the Capital Requirements Directive (2006/48/EC and 2006/49/EC). The purpose of this consultation is to collect comments of the industry and other stakeholders on these modifications. The Commission is also conducting an impact assessment related to the modification of certain provisions. Stakeholders are invited to give the Commission their views on the issues by 16 June 2008.

The purpose of Directives 2006/48/EC and 2006/49/EC is to ensure the financial soundness of credit institutions ("banks") and investment firms and thus provides the very backbone of day to day prudential supervision of these institutions; it follows that this legal framework needs to be regularly updated and refined to respond to the needs of stakeholders.

The consultation takes place in the context of on-going work related to the Capital Requirements Directive (CRD) at various supervisory and industry fora. The review of the CRD is, in part, also a response to the recent recommendations of the G-7 Financial Stability Forum.

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Opinions are sought on: (i) large exposures, (ii) hybrid capital instruments, (iii) supervisory arrangements, (iv) the waivers for banks organised in networks and (v) adjustments to certain technical provisions. The suggested measures concerning large exposures and hybrid capital instruments and the adjustments to the technical provisions are largely based on advice from the Committee of European Banking Supervisors (CEBS). The working document does not constitute a formal Commission proposal. Nevertheless, informal discussions have already started in the European Banking Committee. The consultation is open until 16 June 2008 on:

http://ec.europa.eu/internal_market/bank/regcapital/index_en.htm Comments should be sent to the following e-mail address:

[email protected]

Comments will be posted on the above-mentioned website, unless authors specifically request the contrary. The Commission will draw up its formal proposal at a later stage.

9.

SPEECH/08/205

Charlie McCreevy

European Commissioner for Internal Market and Services Making the best of SEPA National Payments Conference 2008 Dublin, 18 April 2008


Thank you for inviting me to address you this morning on the subject of SEPA, the Single Euro Payments Area and more particularly on "how we can make the best of SEPA".

I must start with a confession. Although as Finance Minister I was familiar with payments in Ireland, I have to admit that it was only when I left Dublin to come to Brussels a couple of years ago, that I became aware of the full potential of SEPA.

SEPA is a tremendous opportunity for Europe and countries like Ireland, but SEPA remains one of the best kept secrets in the Single Market.

Benefits of SEPA

So why is SEPA so important and why does it hold so much potential?

They say that money makes the world go round but it is payments that make money go round the world.

Payments are the lifeblood of a modern economy. Without an efficient payments system it is not possible to build an efficient and properly functioning economy.

Thanks to SEPA, making electronic payments in euros throughout the whole of the EU is going to become as easy, efficient and convenient as making national payments today.

As payments professionals you know that payments are essentially a volume-related business. The integration of national payment systems through SEPA will produce substantial economies of scale

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thus lowering payment processing costs. It will also enhance competition by making cross-border competition for payments possible. Together, these will reduce the cost of payments to users.

Major payment users such as corporates, public authorities, retailers and SMEs should benefit from improved business efficiency and reduced operating costs linked to payments. By facilitating cross-border payment, SEPA could have a dynamic impact allowing business, especially SMEs to reap the full benefits of the internal market and promoting retail financial market integration.

Overall, SEPA will increase the competitiveness of European business and the financial sector, as well as bring about the integration of payments markets in the EU which was identified in 2000 as one of the key measures to improve Europe's competitiveness, growth and employment under the Lisbon Agenda.

And the contribution SEPA can make is substantial.

A recent study carried out by Capgemini for the Commission estimates that if we can migrate quickly to SEPA, then the potential benefits in payments markets alone are 123 billion euros over the next 6 years.

But this is not the end of the story, if we can use SEPA as a platform for e-invoicing, then the study estimates that a further 238 billion euros of savings could be achieved. In addition, SEPA could be used as a platform for e-lending and trade financing. In the public sector, SEPA could be used to drive e-Government and the development of transactional services in areas such as: e-procurement, taxation, and customs.

Ladies and Gentlemen, I hope I have convinced you that these benefits are worth striving for.

SEPA - the next steps

But, let me return to your question. How can we make these potential benefits a reality? How can we make the best of SEPA?

Clearly, SEPA is a market-driven project. So the major thrust for the initiative must come from the market at the national level together with the national SEPA coordination committees. But from the regulatory side, we too must make sure our own house is in order.

The Payments Services Directive provides the legal foundation for SEPA. To be able to develop and launch SEPA products, industry needs a sound legal platform. Member States need to implement the PSD rapidly, consistently and faithfully. I am pleased to say that we are making good progress and are working closely together with national authorities and other stakeholders through workshops and an inter-active web-site to achieve this aim.

There are many exciting developments taking place in payments market, such as mobile payments, pre-paid cards, contactless cards, and e-invoicing. Our hope is that the PSD will foster market innovation by providing a prudential framework facilitating the access of new players into payments markets.

So much for the regulatory framework. What does the market need to do to make the best of SEPA?

I see four key areas that need attention. These are: SEPA migration, cards, additional optional services and SEPA governance. Let me say a few words about each in turn.

First, SEPA migration.

As far as migration is concerned, we need a realistic timeline for the full completion of the project. By completion I mean the widespread use of SEPA products by retail customers, SMEs, corporates and the public sector.

We have got off to a fine start. Over 4000 banks adhere to the SEPA Credit Transfer Scheme and already several hundred thousand SEPA transfers are being made daily. This is significant but we still have a long way to go, before we reach our target of securing the migration of a critical mass of payment instruments by 2010.

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We need to avoid a long migration period as this is particularly costly for the banking industry. The longer the transition period, the longer banks have to bear duplicate costs for operating existing legacy payment systems as well as the new SEPA systems. This will result in sub-optimal SEPA pricing.

Public authorities can play a major catalytic role in SEPA migration. Together they represent around 15-20% of all payments. Given the wider benefits to society, public administrations could and should play a major role in kick-starting migration.

However, let me be clear. We are not arguing that public authorities should blindly adopt SEPA products whatever the cost. On the contrary, early adoption of the new SEPA payment instruments must be subject to respect of the non-deterioration principle as compared to the cost and service level of existing payment instruments. We fully support the non-deterioration principle. Therefore, banks should in the first place develop attractive products and market them actively so that there is a natural momentum for customers to migrate to SEPA.

The need for a rapid and smooth SEPA migration as well as the catalytic role of public administrations subject to the non-deterioration principle is widely supported at the highest political level, as stated in the Ecofin conclusions of last 22 January.

Let me move on now to the second area - national debit card schemes.

Within SEPA, functionality will undoubtedly be expanded so that a card can in principle be used at any terminal in the euro zone. Unlike the comprehensive rule books for credit transfers and direct debits, the SEPA Cards Framework does not develop any detailed rules and standards, but rather describes three options for attaining SEPA compliance. There is a justifiable concern that under current market developments, this increased functionality is likely to come at the cost of increased market concentration and a more expensive payment card for the merchant. At the heart of this issue is our concern that cheaper national card schemes should not be replaced by more expensive payment card schemes, using SEPA as a pretext.

There is a therefore a danger for debit cards that, instead of leading to more competition, SEPA leads to less.

Last December the Commission ruled against Mastercard's cross-border MIF. The decision found that the MIF inflated the costs of card acceptance by retailers, since the MIF accounts for a large share of the final price companies pay for accepting Mastercard's payment cards, without leading to proven efficiencies.

I know this decision has been received with mixed feelings by the banking industry. I have even heard some voices who say that this Decision is jeopardizing SEPA.

But, ladies and gentlemen, let me be clear on one point: the Decision did not conclude that all MIFs are illegal per se. Only that Mastercard had not demonstrated that its MIF contributed to objective efficiencies or that it benefited consumers. Of course, as regards the possible emergence of a genuine European scheme, I fully recognise that where banks are called upon to make fresh investment to create a new EU debit card player, clarity on possible business models and a possible MIF that is compatible with EU competition law is crucial.

The need for clear communication is a point that we have stressed internally. In response, the exceptional step of publishing a provisional non-confidential version of the Mastercard Decision has been taken. Together with the Competition Directorate General, we will continue our dialogue with the industry to make sure that there is sufficient clarity and legal certainty in the market.

I would also like to mention the importance of further progress on standardisation. We need open standards, so that all scenarios are possible for SEPA card migration, including widening the reach of existing domestic schemes or the emergence of new schemes.

These card standards need to be delivered on time. The Commission is carefully following the industry's work to meet the deadline of end-2008 for the delivery of minimum requirements for card standards. This will help guarantee a level playing field for all existing and new card schemes.

The third issue I wish to touch on is Additional Optional Services.

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AOS will play an important role in the future European payments market and are vital for the SEPA “business case” of many institutions. Payment services will become increasingly commoditized and banks will need to develop new sources of revenue by the provision of AOS, such as e-invoicing. But, the risk is that the provision of these services may lead to new, national fragmentation and the economies of scale and the massive productivity gains that could be achieved by their development at EU level may not be attained.

To accelerate the emergence of open and interoperable electronic invoicing services across Europe, we have created an Expert Group on e-Invoicing. The Group is composed of industry experts from large and small enterprises as well as financial services providers and standardisation organisations as well as the public sector. Its mandate is to design a "European Electronic Invoicing Framework" (EEIF) by 2009.

The final issue is SEPA governance.

The Commission attaches great importance to the governance arrangements for the European payments market. If users cannot participate effectively in the SEPA governance arrangements, then it becomes doubtful whether the current and future needs of users will be adequately met on a timely basis. This is vital for a complex project such as SEPA, which involves so many different end-user groups in various countries. The creation of the stakeholders' forum by the EPC is clearly a move in the right direction, but how this user consultation is incorporated into EPC decision-making may need further reflection. The importance of proper governance arrangements has already been recognised in countries like Ireland, the Netherlands and the UK. So we will be closely following developments.

Conclusion


You, together with other payment market professionals, have already achieved much to bring SEPA from theory to practice. But more remains to be accomplished, if SEPA is to become the world-class payment system that Europe's citizens and businesses deserve. As regulators, we can only try to provide a level playing field and a proper regulatory framework for competition.

In Brussels, Ireland is often viewed as a country that knows how to make the best out of Europe. As a relatively small country on the periphery of Europe, SEPA holds tremendous potential for Irish business and consumers. It is my hope that in future years, people will look back in the same way and recognise that Ireland is a country that also knows how to make the best out of SEPA. I am sure you have the capacity, skills and determination to make this a reality.


10.

SPEECH/08/209

Charlie McCreevy

European Commissioner for Internal Market and Services The Safety and Efficiency of Post-Trading Arrangements in Europe Joint EC/ECB conference on post trading Frankfurt-am-Main, 21 April 2008


Allow me, first of all, to welcome you to the first joint European Commission/ECB "plumbers' conference", if I can borrow a metaphor from Peter Norman's recent book.

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We are all fully aware how important post trading is for the proper functioning of our financial markets.

In spite of this, a few years ago not many people outside the post-trading business knew much about this field. If you allow me to continue with my initial metaphor for a bit longer, post trading is no different from the more familiar types of "plumbing": when it works properly, nobody thinks about it; however, if it does not, everyone notices immediately.

In each Member State, post-trading solutions were tailor-made to suit the needs and characteristics of the local market. These systems operated efficiently and safely and true to my earlier comment, hardly anyone thought about them. If the story stopped at this point, I guess we would not be here today.

As it happens, the story was far from over. The integration of the various national financial markets into a single, European market brought about an exponential increase in cross-border financial transactions. This, in turn, increased the number of interactions between the national post-trading systems, uncovering, at the same time, a stark truth: what was optimal at national level turned out to be less optimal at a European level.

Securities market participants have developed makeshift solutions to compensate for the lack of efficient connections between national systems. These makeshift solutions, while effective, proved to be insufficient. This was clearly reflected in the prices: the cost of a cross-border transaction was several times that of a domestic one. In such circumstances, one could hardly talk of a true single market.

Something was wrong with the "plumbing", and all of a sudden people started to take notice.

Since then, the initial focus on trading has shifted and the Commission has managed to push post-trading issues up the agenda and into the mainstream debate about financial markets integration.

Several initiatives are currently under way, each targeted at creating a safe and efficient EU post-trading market. They are: the Code of Conduct, the removal of the Giovannini barriers, TARGET2-Securities and the ESCB-CESR standards. These initiatives cannot be looked at separately for they are pieces of the same intricate jigsaw puzzle: all of them are necessary for the puzzle's completion.

This conference represents a good opportunity to take stock of the progress made so far by these initiatives and to discuss possible future steps in resolving the still outstanding issues.

Allow me now to focus on two of the initiatives I have just mentioned, namely the Code and the removal of the Giovannini barriers.

A little less than two years ago, I chose to provide the private sector with a unique opportunity and asked the industry to come up with a solution on its own. The industry stepped up to the plate and less than four months after my call presented me with the Code of Conduct for clearing and settlement.

At the time, I acknowledged that my favouring a Code over legislation was not without risks. However, a bit less than two years on, I believe that the gamble is paying off.

The beginning of 2008 marked the full entry into force of the Code. So far, the results it has brought are overwhelmingly positive.

The Code has, first of all, significantly increased price transparency. There is now universal publication of fees, as well as much more clarity on discount and rebate schemes.

Furthermore, since the beginning of this year, services have also been unbundled and accounts will be provided on a separated basis.

As good as these results may be, they are not the primary objectives; they are means to an end. Their purpose is to facilitate greater competition in the post-trading sphere. What we are witnessing right now is movement in the right direction on this front.

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The Code has injected momentum into the market. The appetite of post-trading infrastructures to go to other markets and to compete with incumbents has increased. This is clearly reflected in the large number of link requests that have been made since last summer. The recent announcement of "Link Up Markets" is a further illustration of market momentum.

We are now starting to reap the benefits of these movements. For example, where the threat of competition has been strong, post-trading fees have started falling.

These achievements are tangible, concrete and visible in the market. Any other alternative instrument – including a legislative one – would have blocked the momentum. It would have diverted attention from innovation and competition and would instead have focused minds on discussing legal fine print – probably for years.

The progress with the Code has been encouraging. There are, of course, still some teething problems, in particular in the area of access and interoperability. While this is not a particular surprise because establishing links between infrastructures is a complex and time-consuming process, the issues do need to be sorted out in coming months.

I recognise that interoperability between central counterparties involves challenges for providers, users and regulators alike. Thus all involved entities have a legitimate interest to study these issues in depth.

But endless foot-dragging is not going to be acceptable - be it by incumbent infrastructures or their regulators.

The Commission is monitoring the situation very closely to ensure that all actors involved respect the commitments of the Code and the Guideline as well as broader obligations of, for example, a competition nature.

To ensure progress I call on all infrastructures to fully respect and apply the Code in order to show that it can deliver competition. I do not think I need to remind the industry that the Code is the last chance they have to prove that they are capable and mature enough to provide adequate solutions to the current issues.

Of course, the private sector is not the only one that needs to increase its efforts. The public sector needs to play its part as well.

Member States welcomed the Code when it was announced and I therefore expect them and national authorities to back it up with support on the ground.

When assessing link requests, national authorities accordingly need to consider the effect on the freedom to provide services enshrined in the Treaty and the freedom to choose your post-trade location provided for by MiFID.

To be fair, there has been some progress in the right direction recently.

The Commission welcomes the Post-Trading Expert Group set up by CESR and commends the work they are conducting on mapping the regulatory arrangements in the various Member States. I am convinced that, with good will and good work, regulators will be able to bridge the identified regulatory gaps across jurisdictions.

I also urge regulators to resume work on the ESCB-CESR standards as soon as possible. I said this during the informal ECOFIN meeting in Ljubljana, and I take this opportunity to repeat the message once again.

A political consensus on this matter seems to be emerging, which is encouraging news.


Allow me now a few words on the Giovannini barriers.

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In the seven years since they were first identified, a lot of work has been carried out in order to remove them. Yet still a lot more remains to be done.

The most progress has been made in eliminating the private sector barriers. For this I would like to congratulate the private sector. I would also like to thank the members of the CESAME group for their work in this area.

As you probably know, the mandate of the group will expire this June. However, in order to keep momentum going, a new group – called CESAME 2 – will be created. The Commission is currently accepting applications for membership in the group. I therefore take the occasion to invite all interested industry experts to apply.

Progress on eliminating the public sector Giovannini barriers has been less swift. That does not imply that there has been no progress. Nevertheless, the Commission is aware of the fact that the public sector needs to pick up the pace of its work, also in order to avoid hampering progress in the private sector's efforts.

In October last year, the Council called on the Commission to propose concrete actions and a timeframe for the removal of the legal and fiscal barriers.

As regards the fiscal barriers, the Commission intends to take a two-pronged approach, based on the proposals made by the FISCO group last October.

On transaction tax procedures, the Commission is planning to immediately establish bilateral contacts with each of the two Member States concerned and discuss possible solutions.

On withholding tax procedures, the Commission considers that a Commission Recommendation to be adopted at the beginning of 2009 is a possible way forward.

The Commission is now analysing the pros and cons of the FISCO proposals. It will also conduct further discussions on the subject with the industry, Member States and the recently established joint EU/OECD Working Group.

As regards the legal barriers, the Commission is waiting for the final advice of the Legal Certainty Group, which should be ready later this year.

This advice will address the complete range of legal issues identified by the Giovannini report. These include national differences in the legal treatment of securities and restrictions on the location of securities, as well as the legal elements of national differences in rules governing corporate actions.

An additional helping hand to the process of removing the Giovannini barriers could also come from the T2S initiative.

Some market participants have been arguing that eliminating the Giovannini barriers will not suffice to have true competition in the post-trading arena. They claim that further obstacles exist in some Member States. These obstacles either prevent entry from - or create unfair bias against - providers of clearing and settlement from outside that Member State. As I have said on other occasions, if such obstacles exist, the Commission will demand that they be rapidly dismantled.

Last but not least, the Commission is adopting amendments to the Settlement Finality Directive and the Financial Collateral Directive in order to bring the two Directives in line with market and regulatory developments that have occurred since their adoption.


I am convinced that the successful completion of the various on-going initiatives will allow for the creation of a truly integrated European post-trading market, which will further strengthen the European financial market.

The potential benefits for the EU economy are immense. The Commission will be attentive to ensure that these benefits will not stop at the wholesale level, but rather will percolate down the whole value chain and reach the retail level as well.

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I look forward to hearing the debates on how to make this project a reality.

11.

IP/08/619


Accounting: Commission Services report on convergence efforts of key partner countries

The Services of the European Commission have prepared a Working Paper on third countries in the process of converging their national Generally Accepted Accounting Principles (GAAPs) towards International Financial Reporting Standards (IFRS) and on the progress towards the elimination of reconciliation requirements that apply to Community issuers listed in these countries. In the report the Commission Services take the view that Japanese GAAP and United States GAAP both meet the criteria of equivalence to IFRS. Chinese GAAP will continue to be accepted, but since it moved to IFRS for the first time in 2007, more information on its implementation is needed. On this basis, a review in the future, will take place. The Paper also concludes that an exemption until 2011 should be granted to Canada and South Korea in view of their ongoing efforts to move to IFRS in the near future. Within the coming weeks the Commission is expected to present legislative proposals to this effect.

In the Paper the Commission Services recall the move, in 2007, by the United States Securities Exchange Commission to waive the requirement for IFRS-based financial statements to be reconciled to US GAAP. The European Commission continues with its objective for seeking removal of this reconciliation requirement for all European issuers using IFRS as adopted by the EU. Efforts need to continue to resolve the issue of the carve-out of IAS 39. In this context the Paper calls on the IASB to play a full role.

The Paper also considers countries which are already successfully applying IFRS. These include, for instance: Australia; Hong Kong; New Zealand; Singapore and South Africa. Israel has made IFRS mandatory for all listed companies except for banks and dual listed companies as from January 2008. In these cases the Paper calls for an explicit and unreserved statement of such a compliance with IFRS to be included in the audited financial statements. In the coming years the Commission Services will continue to monitor the situation and assess ongoing efforts by third countries in moving to IFRS.

The Paper is available at:

http://ec.europa.eu/internal_market/accounting/news/index_en.htm

12.

MEMO/08/267


Amendments to Settlement Finality Directive and Financial Collateral Directive: Frequently Asked Questions (see IP/08/636)

What is the purpose of the Settlement Finality Directive and the Financial Collateral Directive?

Directive 98/26/EC on settlement finality in payment and securities settlement systems (SFD) and Directive 2002/47/EC on financial collateral arrangements (FCD) are the two main Community

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instruments in the area of clearing and settlement and financial collateral. The SFD provides protection to both payment and securities settlement systems in case of the default of a participant to those systems and thus seeks to minimise systemic risk, whereas the FCD regulates and facilitates the cross-border use of financial collateral.

Why is it necessary to amend these two directives?

The Commission evaluated the two directives in 2005 and 2006 respectively. Following extensive consultation the Commission concluded that both directives work well and that Member States, market participants and other stakeholders strongly support them. The Commission does therefore not propose any substantial changes but propose to amend them in limited areas in order bring them in line with regulatory and market developments having occurred since the time of their drafting and adoption.

The main changes in the proposal concern, first of all, the explicit protection of the SFD to night-time settlement and linked systems, since pursuant to 'Directive 2004/39/EC on markets in financial instruments' (OJ L 145, 30.4.2004, p. 1) and the European industry-sponsored 'Code of conduct for clearing and settlement', systems are expected to become increasingly linked.

Secondly, the proposal seeks to broaden the scope of the protection provided by both directives by including credit claims eligible for the collateralisation of central bank credit operations in order to facilitate their use throughout the Community.

Lastly, this proposal seeks to introduce a number of other simplifications and clarifications to facilitate the application of the FCD and SFD.

Will the proposal lead to more stability in financial markets?

Ensuring the proper functioning of settlement systems in rapidly evolving markets is indispensable for the stability of financial markets, even more so in times of market turmoil. Whilst the Commission started preparing the proposal in early 2007, i.e. before the onset of the ongoing financial turmoil, the latter provides an additional argument in favour of the proposal: it would strengthen the existing tools for managing such situations. For example, the establishment of a harmonised legal framework for the use of credit claims as collateral in cross-border transactions would enhance market liquidity.

Why is it necessary to adapt the SFD to cater for a linked marketplace?

The SFD was drafted in the mid-1990s. The purpose was to prepare European payment and securities settlement systems for the euro and a more integrated market place. It did so well and has offered and continues to offer an essential safeguard against the default of a participant affecting a system.

However, since the time of drafting, legislation and markets have developed. In November 2007, MiFID entered into force. Moreover, since January 2008, the Code of Conduct for clearing and settlement is fully in force. While MiFID enables investment firms, regulated markets and Multilateral Trading Facilities (MTFs) to choose their post-trade location, the Code aims to make the user choices enshrined by MiFID not a theoretical possibility but an effective option. It does so by notably making it easier for service providers to gain access to and become interoperable with infrastructures in foreign markets.

These choices and facilities may herald a market place where post-trade systems are increasingly linked. The aim of the proposal is to ensure that the SFD is fully adapted to such a market place.

How does the proposal adapt the SFD to a market where more systems may be linked?

The proposal aims to adapt the protection afforded by the SFD to a market where more systems may be linked in a number of ways. First, it clarifies that systems can become participants or indirect participants of another system. Second, it introduces a definition of interoperable system. Third, it aims to protect systems from the risks of default in an interoperable system. Fourth, it clarifies that in case of interoperable system, the rules on the moment of entry and revocation shall not be affected by rules of the other systems with which it is interoperable. Fifth, it insulates collateral provided to a system from the default of an interoperable system.

Will this proposal facilitate the appearance of new links?

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The Commission wants a European post-trading structure that is efficient and safe and where systems compete on an equal basis. The Commission is neutral as regards market structure provided that these regulatory objectives are met. The proposal accordingly only aims to ensure that a market structure where systems may be more linked remains safe. However, it is for systems to determine whether they want to exploit the opportunities offered by MiFID and the Code.

How many systems are currently linked?

A number of linked systems have existed for a number of years. The most notable link as regards securities settlement is the 'bridge' between Euroclear Bank and Clearstream International. Moreover, around 60 links exist between securities settlement systems, although only a third of those are actually in use.[1] Since the entry into force of the Code's part on access and interoperability, a large number of link requests has been made. So far, none of these have led to the realisation of an operational link, even though some links requests are close to being finalised. However, the Commission expects the market to evolve significantly in the years to come as an effect of MiFID, the Code and possibly the ECB's TARGET2-Securities project. The proposal aims to prepare the SFD for such a reality.

What is the purpose of the provision on night-time settlement?

Since the SFD was adopted, more and more systems have introduced business days that start immediately after the closing of the previous business day. Such systems provide night-time settlement services, mainly designed to execute bulk and retail transactions. Currently, only transfer orders that are carried out on the same calendar day ('day of the opening of insolvency procedures’) are covered. Therefore, a strict reading of the SFD could suggest that a transfer order is protected only if the batch processing is finalised before midnight, whereas a batch running after midnight is not.

The purpose of the proposal is therefore to eliminate any uncertainty about the status of night-time settlement services. The reference to 'day' should accordingly be replaced by a reference to 'business day, as defined by rules of system'.

Why does the proposal extend the definition of participants and indirect participants?

Systems that are linked by means of access, i.e. one system becoming a participant in the other, currently do not fall under the protection of the SFD as a 'system' currently cannot be a participant. This is problematic as such access is likely to become more common as a result of MiFID and the Code. In order to protect transfer orders entered by a system into another system, the proposal extends the definition of a 'participant' to a 'system'.

Moreover, Article 2(f) SFD allows Member States to consider an indirect participant as a participant if it is warranted due to systemic risk and provided that the indirect participant is known to the system. This option is limited, as only credit institutions can be considered as indirect participants and as it only applies to payment systems. However, other institutions indirectly participating in a system may also represent systemic risk (e.g. CCPs, investment firms...). The proposal therefore expands the definition of 'indirect participant' by aligning it with that of 'participant'.

Why is there a provision on Electronic Money Institutions?

It is not sufficiently clear whether the definition of credit institution in the current SFD includes Electronic Money Institutions (ELMIs). This has led to divergent transposition into Member State law. While ELMIs are currently not of major importance, it may increase in the years to come. It should therefore be made clear that they fall under the scope of the SFD.

Will the proposal oblige central banks and market participants to accept all credit claims as collateral? Why?

No. The decision whether or not to use credit claims as collateral is entirely left to Member States and market participants. What the proposal does is to grant to those credit claims which are in fact used as collateral (according to the requirements set out by the collateral taker) the same level of protection enjoyed by other types of financial collateral. Furthermore, applying a harmonised set of rules to credit claims used as collateral facilitates their use in domestic and cross-border transactions.

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Will the proposal lead to an increase in the (cross-border) use of credit claims collateral?

It is likely that by applying easier rules, credit claims will be used more frequently in the future. However, this basically depends on the demand in the market for other forms of collateral. In times of financial crisis, this demand and the subsequent use might be growing. There has already been some increase in the first months of 2007, pursuant to the decision of the Eurosystem to include credit claims as an eligible type of collateral for Eurosystem credit operations as of 1 January 2007.

How does the use of credit claims relate to securitisation?

There is no direct link between securitisation and credit claims; both can be used as forms of collateral. In the current financial turmoil that started with the sub-prime crisis and the problems with "asset-backed securities", securitisation has received a somewhat negative annotation. Investors that purchased the complex instruments created through securitisation were often not able to properly assess their risks because not enough information was available on the assets present in the pool backing the instruments. From this point of view, the solution of using credit claims collateral is much more transparent. As long they are not bundled together, the collateral taker is able to assess their creditworthiness on an individual basis before deciding whether or not to accept them.

What is the impact of the proposed amending directive on consumers?

There should be no direct impact on consumers, as credit claims by individual consumers are not covered, since the proposal envisages a carve-out of the forthcoming Consumer Credit Directive.

Why does the proposal not address the issue of "netting"?

It is generally recognised that the provision in Article 7 FCD on close-out netting has contributed largely to eliminate Giovannini barrier 14 (i.e. add more detail to explain to the uninitiated). The Commission believes that it is worthwhile to explore the netting issue further, and will do so, but this would go beyond the scope of the FCD and the current exercise.

Why does the proposal not address "conflict of laws"?

The proposal contains no amendments to the so-called "PRIMA-rule" in Article 9 SFD and Article 9 FCD, because there is presently no agreement in Europe if and to which the extent these provisions ought to be changed. This relates in particular to the question whether or not the Community should adhere to the Hague Securities Convention. A proposal by the Commission to sign the Convention has been blocked since 2003. As long as there is no agreement among Member States about which line to take, the Commission considers it for the time being not appropriate to introduce any new proposals to amend the current provisions.

13.

IP/08/636


Securities markets: Commission proposes amendments to Settlement Finality Directive and Financial Collateral Directive (see MEMO/08/267)

The European Commission has issued a proposal to amend the Settlement Finality Directive and the Financial Collateral Directive to strengthen the protection of settlement systems and financial collateral arrangements.

Internal Market and Services Commissioner McCreevy said: "Ensuring the proper functioning of settlement systems in rapidly evolving markets is indispensable for the stability of financial markets, even more so in times of market turmoil. Following MiFID and the Code of Conduct, we are witnessing an increasing number of requests for cross-border links between post-trade systems. This is a positive development, which I want the Settlement Finality Directive to cover fully. We are also witnessing an increased use of new types of collateral in the marketplace, in particular credit claims. However, the use of credit claims as collateral in cross-border transactions is almost non-existent, as they currently do not enjoy the protection of the Financial Collateral Directive. I would like to remedy this as well."

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Directive 98/26/EC on settlement finality in payment and securities settlement systems (SFD) and Directive 2002/47/EC on financial collateral arrangements (FCD) are the two main Community instruments in the area of clearing and settlement and financial collateral. The SFD provides protection to both payment and securities settlement systems in case of default of a participant to those systems and thus seeks to minimise systemic risk, whereas the FCD regulates and facilitates the cross-border use of collateral.

The Commission evaluated the two directives in 2005 and 2006 respectively. Following extensive consultation, the Commission concluded that both directives work well and that Member States, market participants and other stakeholders strongly support them. The Commission therefore does not propose any substantial changes to the two directives; it simply proposes amending them in limited areas in order to bring them in line with regulatory and market developments that have occurred since they were originally drafted and adopted.

The main changes in the proposal concern, firstly, the explicit protection of the SFD as regards night-time settlement and linked systems. Pursuant to Directive 2004/39/EC on markets in financial instruments (MiFID) and the industry-sponsored European 'Code of Conduct for clearing and settlement', systems are expected to become increasingly linked.

Secondly, the proposal seeks to broaden the scope of the protection provided by both directives by including credit claims eligible for the collateralisation of central bank credit operations in order to facilitate their use throughout the Community.

Lastly, this proposal seeks to introduce a number of other simplifications and clarifications to facilitate application of the FCD and SFD.

Whilst the Commission started preparing the proposal in early 2007, i.e. before the onset of the current financial turmoil, the latter provides an additional argument in favour of the proposal: it would strengthen the existing tools for managing such situations. For example, the establishment of a harmonised legal framework for the use of credit claims as collateral in cross-border transactions would enhance market liquidity.

The Commission's proposal is available at:

http://ec.europa.eu/internal_market/financial-markets/settlement/index_en.htm

http://ec.europa.eu/internal_market/financial-markets/collateral/index_en.htm

14.

IP/08/653


Financial services: payment security is key to improving consumer confidence in new payment services, says Commission report

The European Commission has published a report on the actions undertaken on prevention of payment fraud between 2004 and 2007 following an Action Plan on this matter. This report shows that the security of means of payment and payment systems is a necessary condition for improving consumer confidence and trust in new payment services. From a regulatory point of view, the security of means of payment has been addressed in recent legislation, namely in Payment Services Directive, and also the third Money Laundering Directive by means of the "know your customer" obligations. The development of the Single Euro Payments Area (SEPA) by industry will provide an opportunity to build on the legislative framework to increase both security and trust.

Internal Market and Services Commissioner Charlie McCreevy said: "Payment fraud affects consumer confidence in non-cash means of payment and therefore remains a threat to the success of the single market for payments. The Commission is working actively to minimise the payment fraud threat, for the benefit of consumers and financial services providers alike."

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Even if it affects a minority of users, fraud undermines general confidence in payments systems. A study conducted for the Commission in 2007 shows that user trust in certain authentication methods for cashless payments could be improved. Maintaining or enhancing user confidence does not necessarily require new legislation but rather the commitment of the parties involved to achieve this goal. Increasing public awareness and education is crucial in this context. This study was part of an Action Plan implemented by the Commission over the 2004-2007 period concerning payment fraud prevention. This action plan included other initiatives, such specialised conferences, with a view to raising awareness about this threat.

Further to the Action Plan measures, recently adopted European legislation in the financial services area contains provisions which directly or indirectly address the prevention of payment fraud and contributes to the creation of a more robust legal environment at EU level in this area: (i) the directive on the prevention of money laundering (2005) requires the implementation of a sound "know your customer" policy by financial institutions; and (ii) the new Payment Services Directive (2007) contains specific rules aimed at reducing the risks and consequences of unauthorised payment transactions.

Payment fraud is a moving target and, inevitably, new threats appear, such as identity theft/fraud and, more generally, cyber crime. In 2007, the Commission announced its policy objectives regarding cyber crime and will continue to closely monitor developments in this area. The report is available at: http://ec.europa.eu/internal_market/payments/fraud/index_en.htm#ap2004-7

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