The EU’s Institutions and the Financial Crisis
The seminar of 24 February 2010 saw former Secretary General of the European Commission Carlo Trojan give a lecture on the role of the European Union’s institutions during the current financial crisis. Before doing so he first gave a brief overview of the nature of the crisis, its origins and the impact it has made. The crisis began with the collapse of the housing market in the United States causing a systemic crisis, followed by the bankruptcy of Lehman Brothers which led to the financial meltdown. Among the reasons cited for the crisis are risk management failures, increasing asset and real estate prices and global imbalances, among others. The crisis is considered one of the biggest in decades and has led the EU to run an average government deficit and debt of 7.5 % and 80 % respectively.
Mr Carlo Trojan
Mr. Trojan then went on to discuss the EU’s policy responses to the crisis. Initially the responses were uncoordinated, as was illustrated by the various bail-outs made by national governments. The European Central Bank undertook drastic measures, cutting the interest rate to 1 % and providing liquidity to European banking systems and international financial institutions. The turning point, according to Mr. Trojan, was the emergency summit of the Eurogroup and the United Kingdom in October 2008. The plan they developed consists of national rescue packages based on a common template, while the European Commission provides guidance to Member States and works to avoid distortion of competition. Other plans include a reorganization of supervisory agencies in the financial sector.
Audience
On the whole Mr. Trojan was positive about the EU’s institutions handling of the crisis, in particular the European Central Bank. The Commission, if somewhat in the background during the initial phase of the crisis would go on to ensure the proper functioning of the internal market. The main issue was external representation, with the EU being unable to speak with a single voice in international forums due to a lack of coordination among the various EU actors.
Finally, Mr. Trojan looked ahead to issues that need to be resolved in the future to better deal with financial crises. The main points for the EU for future policy improvements are to ensure better coordination at the EU level for economical and financial issues as well as to devise measures that can be applied at the EU level. With these remarks Mr. Trojan concluded the lecture on the EU and the financial crisis.