Financial Markets - Demands
The Greens have many and detailed proposals for reforming the financial system to not only
end the current crisis but, equally important, prevent such a crisis from recurring. Excessive
liberalisation has been brought about to benefit the share-holder above all else. Greens
believe that the financial sector should serve the global economy. It must not be the economy
that is made subservient to promoting the interests and profits of the financial sector, which
has assumed a far too dominant position - it currently represents five times the GDP of the
US. Europe need not fear that investment would flee if financial institutions were better
regulated, since a more secure market would probably attract investment.
 Financial supervision: Greens want an EU supervisory body responsible for prudential
supervision of European banks and other financial institutions, with responsibilities for
collecting, analysing and exchanging the data necessary to evaluate risk. The structure
must have a centralised decision-making process for establishing standards and rules, but
allow a certain decentralisation for implementation among the Member States.
Considering that creating a supervisory body requires a reform of the Treaty, in the short
term this could be done through an enlargement of the competences of the European
Central Bank to include micro-prudential supervision, in addition to its macro-prudential
tasks. This could be done through a unanimous decision of Council. Bringing prudential
supervision under the roof of the EBC would ensure information exchange and
supervision.
 Hedge funds and private equity funds: These funds must be regulated by an EU
supervisory structure. They are barely scrutinised and regulated in comparison with banks
and insurance companies, giving them a competitive advantage which must be ended. An
EU regulatory framework for them must include detailed rules on transparency as well as
reporting and disclosure requirements. Both the funds and their managers must be
registered.
 EU Recovery Plan and Lisbon objectives: The EU Recovery Plan must be used to support
the objectives of the Lisbon Strategy, with the three pillars - environmental, economic,
social - are given equal priority. The bulk of the public recovery money should be
channelled into 'green' investments (energy efficiency, renewable energy, clean
technologies, building insulation, etc) leading to reduced climate change and energy
dependency, lower energy bills and environmental degradation as well as millions of new
jobs.
 Financial transaction tax: Greens want a tax on all financial transactions, not only on
currency transactions ("Tobin tax"). This would serve to discourage speculative
transactions of shares, currencies and interest rates. Financial markets would become
more stable and considerable revenues would result that could be used for investments in
developing countries to overcome the effects of the crisis and achieve the Millennium
Development Goals.
 Remove the incentives for high-risk activities: Remuneration for traders and others
involved in financial transactions must not be based upon highly risky activities that might
lead to extremely high profits. Such high-risk activities have been among the causes of the
current crisis in the financial sector. Remuneration must reflect long term growth and
stability, not volatile risks.
 Securitisation: Banks must be required to keep more money on their books in order to
cover any potential losses, especially from investments in the newer sophisticated
financial instruments. Greens consider that the Commission's original proposal of 15% of
securitised products would be a first step, whereas the figure of only 5% has been agreed.
 Derivative trading: These markets need to be regulated, so that all transactions go through
normal settlement procedures which can ensure greater security. Informal transactions
should be eliminated, for they allow no transparency or supervision, and encourage
excessive risk.
 Tax havens: These must be eliminated, for they encourage tax evasion and fraud and
constitute black holes with respect to regulation and supervision of financial institutions. All
countries must disclose information on money entering their jurisdiction in the name of
transparency.
 Multinational companies in developing countries: Large corporations that operate
internationally must be required to disclose their profits and the taxes paid in other
countries where they operate, including developing countries. Under current banking
secrecy provisions, developing countries are estimated to lose billions of dollars of tax
revenue.
 Savings directive: The scope of this directive should be expanded from only classical
payments of interest to include other types of interest income from the new innovative
financial instruments, which have so far escaped taxation. It must also apply to
foundations, trusts and other institutions and not only individuals.