ECB’s Trichet: Europe needs to improve legal tools

December 7, 2009
Trichet: need better tools

Trichet: need better tools

    PARIS, Dec 7 (Reuters) – Europe needs new tools to ensure authorities can intervene effectively in the case of the failure of a systemically important financial institution, European Central Bank President Jean-Claude Trichet said on Monday.
   He said the financial crisis had highlighted gaps in the European legal system that could make speedy restructuring difficult.
   “The competent authorities must have available the appropriate instruments to intervene quickly in an urgent situation in a systemic institution in order to prevent a series of shocks waves unfurling on the financial system,” he said in a speech to the Paris Appeals Court.
   “Important progress needs to be made in Europe so that the members of the European Union have the necessary instruments.”
   He said in case of a failure of a systemically significant bank, the main objective of the authorities should be to preserve financial stability.
   In such cases the legal framework should be solid enough that it is not contested by shareholders “but sufficiently flexible to give a certain discretion to authorities”.
   “In the framework of Europe today … the Community law can be an obstacle,” he said.
   He said the idea of a bank presenting a recovery and resolution plan, or “living will” in case of failure was an interesting one but he said it raised “very very important judicial questions”. (Reporting by Anna Willard and Tamora Vidaillet; Editing by Mike Peacock) ((Reuters Messaging: anna.willard.reuters.com@reuters.net; +33 1 49 49 5339; anna.willard@reuters.com))
 Keywords: ECB TRICHET/LEGISLATION
  
Monday, 07 December 2009 09:47:18RTRS [nGEE5B60N3] {C}ENDS

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