Early On, Europe Is Out Front in Overhaul of Global Financial System - by Anthony Faiola
Europe is moving rapidly to overhaul the global financial system in the wake of the economic crisis, pushing through new measures and proposing others that could impose significant restrictions on American and other firms based far beyond its borders.The Europeans are now out front, for instance, in setting strict new standards for rating agencies and risk management at firms selling mortgage-backed securities. Europe has also seized the initiative in developing new rules to monitor hedge funds while forging ahead this week with plans to create two new powerful regulatory agencies in Europe, according to analysts and regulators.
Under a draft proposal issued by the European Commission, the ruling body of the 27-member European Union, U.S. hedge funds may have to subject themselves to tight European oversight or be barred from doing business with European clients. The scope of these efforts is generating a measure of friction, with U.S. officials as well as among some Europeans who favor a more cautious approach toward regulation, such as the British. The sense of alarm is even greater among financial firms that fear Washington may ultimately follow the path set by the Europeans -- historically more disposed to regulation than Americans.
Note EU-Digest: At least as a first step this is excellent policy by the EU to avoid future financial disasters as the one we are presently experiencing world-wide.
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