Current economic indicators seem to show a cautious recovery in some of the biggest European economies, such as Germany and France.
Current economic indicators seem to show a cautious recovery in some of the biggest European economies, such as Germany and France. We asked the new chairwoman of the Committee for Economic and Monetary Affairs, British Liberal Democrat MEP Sharon Bowles, about her perception of where the crisis is going and to what extent financial markets should be regulated.
Do you think the worst of the financial crisis is over?
SB: I am an optimist and I think the worst is over, but there are still some things that we do not know the details about and some that are continuing to trickle out.
So the indicators we see are pointing in the right direction?
SB: Yes, I think they are. I am worried we have problems in terms of how to balance up the regulation that we are doing. Regulation should be sensible and should not itself cause aftershocks by being too much or by coming too soon.
A lot has been discussed how to increase the capital for banks, issues surrounding the implementation measures for the EU Directive “Solvency II”, and how much the new rules are going to push capital requirements.
Do you think the financial markets are able to self regulate?
SB: I think you need a mixture of self regulation or self discipline and also official regulation. If we take the causes of the crisis - and lots of it is in the US. I think we need to regulate where we identify risk.
It would be wrong to suggest to anybody that we can regulate the risk away. It is to deceive the public to say that if we can regulate, there is no risk. One thing is certain, that sooner or later there will be another crisis. We just hope that through regulation, when we see things might develop into a crisis, then will have the necessary tools and be able to stop the crisis at an early stage.
How would you assess the handling of the financial crisis by the EU?
SB: On balance it is reasonable. Some people demanded more action and cooperation, but they want something that doesn't exist. It is very important to do things collectively, together, to manage to coordinate - it is better for the economy.
Which of the measures the EU has taken was the most effective?
SB: I think the concerted action by the central banks was good and effective. I also think that the European Central Bank played a very good role. It was certainly at an early stage that it recognised the fact that this was going to be a very severe crisis.
Has the EU learned from its mistakes?
SB: I regret to say that the lessons we are learning today are the lessons we had learned before. I think we need to get tougher on the way how we conduct business.