With this new regulation, the European Commission wants to facilitate transnational investments within the EU
The European Union (EU) is determined to strengthen its economy and part of this process involves the harmonization of regulations across all European countries. The European Commission proposed this Wednesday to harmonize insolvency regimes at European level, a measure aimed at “facilitating transnational investment”, as Justice Commissioner Didier Reynders noted.
Currently, Member States have their own insolvency regimes, which poses a “challenge” for investment between European countries. The Brussels proposal contains rules to maintain insolvency status – to prevent actions by debtors that reduce the value that creditors can get – and introduces a simplified regime for micro-enterprises, to reduce liquidation costs and facilitate the cancellation of debts of the owners.
Similarly, states are required to publish a summary of key elements of their national insolvency laws to help investors make investments within the EU. Brussels calculates that this proposal will generate a profit of 10,000 million euros per year. The current regulations “cause legal uncertainty and hinder investments between Member States, in addition to excessive recovery times and high legal costs”, explains Reynders. The new rules “will ensure a level playing field – supporting investors, promoting the free movement of capital and strengthening the market through safeguards and common standards,” he added.
The Brussels initiative also aims to reduce external dependency by attracting the clearing houses, the financial institutions that calculate the guarantees and the payments related to financial derivatives, to the territory of the EU. Currently, European companies contract the services of organizations in the United Kingdom, a country with a large number of such companies. The new European regulations require “all relevant market participants” to hold active accounts with European Union clearing houses. This measure, Brussels stressed, “will improve risk management for the bloc’s financial stability.”
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
