Lamfalussy report: a step in the good direction, albeit not a giant leap - update
The Belgian High Council for a New Financial Architecture, presided by former EMI president Alexandre Lamfalussy, has presentedits final reporttoday. EC-president Barroso attended the presentation, together with Didier Reynders, Prime Minister Herman Van Rompuy, dozens of journalists, people from the financial sector and politicians.
Thefinancial newspaper De Tijd summarizes some points; and has posted some videos with the pros and cons. Ivan Van de Cloot gives his blunt opinion, which I understand, and I explain in my interview why a step-by-step approach could be more efficient. A major argument is that the crisis is not over, and that reform of the institutions in times of crisis (and possible new intervention rounds) could bring even more turbulence. It is not during a major fire that you restrucure the firefighters' department, but afterwards. What you could do however, is change and improve the command team, which should become smaller and communicate faster in times of crisis. That is exactly what Lamfa is proposing.
An element that is somewhat overlooked in the report is the idea of a European Deposit Insurance Scheme (EUDIS). This should be defended by Belgium and other small countries:
* It introduces the necessary debate on 'burden sharing', and therefore the issue that small countries have to support disproportionately (foreign) charges in the financial crisis.
* It will imply more European banking control over time.
Instead of pleading directly for burden sharing and more European banking supervision, which would be bounced by bigger countries, a plea for a EUDIS would imply exactly these elements over time. There is more chance to obtain the result however by going for the latter.
Also, the report proposes a new Systemic Risk Council in Belgium, with members (but much less) from the NBB and the CBFA (macro and micro supervision), with one independent (possibly foreign) member.
De Standaard pointsout that a change of the law of 2002 will be necessary to achieve this new structure.
In "De Tijd", Pierre Huylenbroeck writesa good editorial on the subject.
Address of Mr. Van Rompuy