As European Union leaders prepared to meet on September 17 2009 to try to come up with common positions ahead of the G20 summit in Pittsburgh, the European Commission (EC) put forward the points that it believes the EU should make at the summit.

A key issue within the EU is that of bankers’ bonuses, with some members of the bloc – notably France – taking a strong position on bringing such bonuses to heel. However, other EU states such as the United Kingdom join the Obama administration in the United States in opposing this approach.

The G20 summit in Pittsburgh has the main aim of agreeing on new market regulations to try to avert a repeat of the global economic crisis, with many commentators emphasising that such safeguards are not yet in place in key players such as the US.

In a statement, the EC said that the high degree of co-ordination among EU states in the recent G20 process had made it possible to keep the momentum of international co-operation against the crisis.
 
The September 17 informal dinner to be attended by EU leaders would be a further opportunity to agree how to set the pace to secure a successful G20 meeting, the EC said.
 
"The G20 needs to prepare the exit from the crisis. Fortunately, there are increasing signs that the European and global economy is turning the corner. The risk of meltdown in the financial system has receded. But serious challenges remain, as unemployment continues to rise, public finances look to recover sustainability and the financial sector remains fragile," according to the EC.
 
The Commission called for a continuation of recovery support programmes to stave off the risk of the economy going back into decline by withdrawing the support measures too quickly.
 
"A successful recovery, sustaining demand and stemming increases in unemployment, must remain the top priority."
 
The EU was particularly concerned by the employment and social consequences of the current crisis, the EC said.
 
"Unemployment is back at levels which we have not seen for over 20 years. We need to help efforts to ease adjustment and prevent unemployment from becoming entrenched. And at the same time, we must build new jobs in the areas of the economy which will see the most growth tomorrow."
 
The EU was putting a major focus on moving to a sustainable, low carbon economy based on innovation and knowledge, "equipping people with right skills for tomorrow’s jobs".
 
"And we must ensure that public and private efforts are focused on getting growth flowing as quickly as possible into new jobs," the EC said.
 
This longer term framework should shape the European Union's approach in the G20, according to the EC, which said that the EU should support the development of an international charter for sustainable economic activity.
 
"We should also support an enhanced IMF role in analysing G20 economies in the context of its surveillance mandate assessing the impact of our policies on others, and the risks facing the global economy."
 
The ambitious commitments on financial regulation and supervision agreed to at the London G20 summit should remain an important priority, the EC said.
 
"At Pittsburgh, G20 leaders should increase the momentum for a comprehensive and ambitious reform of the global financial system, which draws on the lessons learned from the crisis and puts in place the right framework of regulations and supervision. It cannot be ‘business as usual’ for the financial markets."
 
Ahead of the Pittsburgh Summit, the EC will present its formal legal proposals for a new European financial supervision architecture.
 
These proposals, according to the Commssion will strengthen oversight of both individual financial institutions and the financial system as a whole.
 
The three new European Supervisory Authorities for banking, securities and insurance and pensions will work together with national supervisors to "foster more coherent, consistent and effective supervisory practice and enforcement as regards individual financial institutions, whilst not impinging on the fiscal responsibilities of (EU) member states".
 
The EC said that the new European Systemic Risk Board will monitor system-wide risk, issuing warnings and recommendations for remedial action when deemed necessary.
 
"This new supervisory architecture will serve as the European cornerstone for a global mechanism to bring new oversight to systemic risks facing global financial markets."
 
The Commission said that European Commission President Barroso would emphasise in Pittsburgh the need to work with the EU’s international partners to seek maximum co-operation in managing such risks, drawing on the expertise of the International Monetary Fund and the Financial Stability Board.
 
"Strong and co-ordinated action on remuneration is essential both to restore the link between compensation, risk management and real sustainable performance, and to sustain public consent for the huge investments made to restore the financial sector," the EC said, touching on the issue probably most sensitive ahead of the Pittsburgh summit.
 
"The Commission Recommendations and the latest amendments to the Capital Requirements Directive already on the table offer a series of detailed proposals: swift adoption of such rules at national level would offer the best platform to press our international partners to make similar international benchmarks through the FSB.
 
"The European Union will need to ensure that the additional guidance to be provided by the FSB will be endorsed at the highest level in Pittsburgh, monitored and delivery benchmarked. They will also have to match the level of ambition contained in the Commission's Recommendations or legislative proposal."
 
The Commission said that EU should also seek a renewed commitment from the G20 to accelerating the pace of delivery on accounting standards and non-cooperative jurisdictions.
 
"It is vital that the IASB delivers on appropriate reform of the accounting rules to ensure that financial stability concerns are fully taken into account to reduce pro-cyclicality in the system."
 
Convergence to high quality accounting standards remains a top priority of the EU, in particular as regards financial instruments, the EC said.
 
"The EU therefore needs to secure a strong political commitment to balanced convergence towards high quality standards no later than 2010. Regarding non-cooperative jurisdictions, a roadmap should be agreed to complete the work, including clear milestones for evaluating their compliance."
 
The EU as a whole has made the largest commitment to strengthening the resources available to the IMF by providing up to 125 billion euro in bilateral contributions, 35 per cent of the total IMF resource increase, according to the EC.
 
"This clearly shows that the EU is fully committed to making the IMF an effective instrument to fight the current crisis and, in a longer-term perspective, one of the key international economic institutions in the post-crisis world."
 
The EC said that the EU should support the strengthening of IMF surveillance, of its lending facilities, and the reform of its governance structure with greater involvement of ministers.
 
The G20 should call for determined action to conclude the on-going negotiations in a timely manner, the EC said.
 
It was time to review the capital adequacy and concessional resources of multilateral development banks and to ensure they are appropriately endowed to meet the challenges of the coming years, according to the Commission.
 
"We must continue to fight protectionism which would only delay the return to growth that we are all seeking. As we experience the first decline in global trade since 1982, the need for open world markets has never been greater. A prompt and ambitious conclusion to the Doha Round would give a timely boost to the global economy, and in particular to developing countries."
 
The Pittsburgh Summit should send an important message on the need to take urgent international action to tackle food insecurity and translate the commitments made in L'Aquila into concrete action. And the Commission and EU member states should underline the urgency and press for ambitious conclusions on climate finance, along the lines of the Commission's proposals, the EC said.