Cause and Effect in European Politics and Law

Sweden looks against some measures in the supervision plan of the European Commission

Adelina Marini, July 2, 2009

Sweden is against the increase of financial regulation so that it could cover the hedge funds and private equity sectors. During the presentation of the Swedish Presidency priorities, which started on the 1st of July, the minister of finance Mats Odell said that those financial organisations are not the reason for the crisis but in some countries the political debate is trying to make them part of the problem. "It is not private equity that caused the crisis, nor hedge funds. But in some countries, the political debate portrays private equity and hedge funds as the problem," said Mats Odell, quoted by the EUobserver. In the European Commission plan, presented in April and approved with certain changes by the European Council on the 19th of June, will require managers of hedge funds and private equity firms to register with their home member state authorities.

Beside this managers will also have to disclose information on borrowing to regulators and notify authorities about the markets and assets they plan to invest in. The aim is to prevent a build up of risks that could destabilize Europe's financial system. In addition to this the proposal of the Commission recommends managers to receive much less bonuses.

But by taking such a position Sweden is getting closer to the position of the UK and the financial sector which means that the Barroso plan might encounter serious obstacles in the autumn. EUobserver also expects major lobbying offensive to have the proposals watered down, Socialists in the European parliament have already signaled that the current draft directive does not go far enough in their view. Bu the president of the Commission, Jose Manuel Barroso who is hoping for a second term, demonstrated certain will to compromise. After he met in Stockholm with the Swedish prime minister Fredrik Reinfeld Mr. Barroso said: "I am not a neo-liberal. I am a central reformer", the EUobserver reports.

In fact, the pressure over the financial institutions in the US is also very strong since the Obama administration also introduced a plan for serious increase of financial supervision and regulation over the US financial market. It is expected that the issue will be central for the G-20 summit in September.