Germany and France are calling on the European Union to accelerate its plans for proposals to put restrictions on credit default swaps and ban naked short selling of bonds and some stock. French President Nicolas Sarkozy and German Chancellor Angela Merkel wrote a joint letter to the European Commission last month.
The two leaders noted that strong market volatility was making it necessary to question certain financial methods and that improving the transparency of short-selling positions on shares and bonds was important. Just this May, the German government unilaterally decided to ban the naked short selling of certain stocks and bonds. Sarkozy and Merkel are also pressing for swift resolution of the differences between the European Parliament and EU member states over a new banking supervision scheme. Disputes regarding the amount of power new agencies will have to oversee banking, securities, and insurance industries have yet to be resolved.
The EC welcomed the letter, saying that the German and French leaders were voicing support for its work, and noted that the “final phase of completing our proposals” is under way. Commission spokeswoman Pia Arenkilde-Hansen also noted that the EC is working with key stakeholders to tackle the issue of derivatives. She did however, point out that member states have “divergent positions” when it comes to short selling. The EC has not yet found a consensus.
The EC acknowledged the need for urgency but insisted that rushing the proposals would be a mistake.
Related Web Resources:
Merkel And Sarkozy Want EU To Ban High-Risk Trading, World News, June 11, 2010
EU leaders ask for short selling, CDS rules, Business Week, June 17, 2010