Finance ministers will hold a series of meetings next week to advance work on improving economic co-operation and governance in the EU. 

The Eurogroup, comprising the finance ministers of the eurozone, will meet in Luxembourg on Monday evening (7 June) and is expected to finalise operating details for a €440 billion stabilisation mechanism to help eurozone countries that get into financial difficulties.

The details to be settled include the procedure for activating the mechanism, notably whether the approval of national parliaments is needed before any money can be released.

Governments agreed to create the mechanism on 10 May in response to the escalation of the eurozone debt crisis. The euro hit a new four-year low against the US dollar on 1 June because of concerns over the sustainability of eurozone public finances.

The Eurogroup discussions will be preceded by a meeting of all EU finance ministers, convened by Herman Van Rompuy, the president of the European Council, as the second meeting of a ministerial taskforce on economic governance. The meeting is expected to discuss a proposal by Van Rompuy that some debt of national eurozone governments should be financed through a joint bond issuance system. The idea has run into strong opposition from both France and Germany. The taskforce will also discuss what sanctions should be applied against member states that break EU rules on fiscal discipline.

On 8 June, finance ministers from all member states are to agree to give Eurostat, the EU’s statistical office, audit powers over national budgets. The powers are intended to prevent any repeat of Greece’s past concealment of the true state of its finances.

German bans

In the margins of the finance ministers’ meeting, there will be a discussion of Germany’s decision on 18 May to ban naked short selling of eurozone government debt and credit default swaps on sovereign debt and shares in ten leading financial firms. Yesterday (2 June), the German government proposed extending the ban to other forms of traded equities.

The European Commission announced yesterday that it will present detailed ideas in September for reforming the market for credit rating agencies (CRAs). These would be followed by proposals, possibly including draft legislation, by the end of the year. National governments and the Commission have criticised CRAs for downgrading Greece, Portugal and Spain during the debt crisis.

The Commission said its ideas include the establishment of a European credit rating agency and giving export credit agencies (ECAs) and credit insurers (CIs) the power to issue ratings.

José Manuel Barroso, the president of the Commission, said that ECAs and CIs have an “established credibility” in measuring risk. Christian Noyer, the governor of the Bank of France, has come out in support of giving CIs the power to issue ratings.

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