Barnier says Europe not out of woods yet on financial crisis
Europe's financial services chief, France's Michel Barnier, said Monday that the world was "not out of the woods yet" after the global financial crisis -- and urged against a return to business as usual.
Barnier, the former French foreign and agriculture minister, faced questions from the British parliament's Treasury Select Committee on the topic of European financial sector regulation.
"Let us be frank. The crisis hit Europe, including the UK, very hard, but also the United States and Japan," the EU financial services commissioner told lawmakers.
"We are not out of the woods yet -- its effects are there for all to see, on jobs and growth and the tough spending cuts, not to speak of the political consequences in many countries.
"It must not happen again. There must be no return to business as usual, or else the liberal free market principles which we all believe in could be seriously at risk.
"We need to learn the lessons from the crisis and put them into practice together. This is my job description."
Barnier, making his fourth visit to London since taking his post ten months ago, added that proposed changes to financial sector regulation would not adversely affect the British capital.
"The changes we are putting in place are not to the detriment of the UK but for its long term benefit, because if we can get the new regulatory supervisory structure right -- and getting it right is a real challenge -- then we will be creating a stronger, sounder, safer financial system," said Barnier.
"Financial markets ... operate at a global scale and that means our regulatory and supervisory approach also needs to be at a European and global level," he added.
"Such a system will be more attractive to investors and make the UK and Europe more competitive globally."
Barnier, the EU commissioner responsible for writing the rules governing all financial trading, also admitted that the eurozone banking-sector stress tests needed to be improved.
"Objectively, I think we have to improve and complete the method. Liquidity is a very difficult issue," Barnier said.
"It's not the thermometer that creates the fever, but you have to make sure that the thermometer is working properly," he added.
Of 91 European banks tested earlier this year, only seven -- five in Spain, one in Germany and one in Greece -- were found to be vulnerable to economic stress.
The Bank of Ireland and Allied Irish Banks (AIB) both passed the European stress tests only to need multi-billion injections from the Irish state just months later.
© 2010 AFP