McGuinness presents EU plan to maintain financial stability and address the EURO liquidity issues!

Just to focus on the financial side of the energy issues. What we are doing today is working on the nexus between energy markets and financial markets. And as you know my role as Commissioner, it has financial stability at its very heart.

Thank you eric thank you president and cadre um good afternoon everyone just to focus on the financial side of the energy issues uh what we’re doing today is working on the nexus between energy markets and financial markets and as you know my role as commissioner it has financial stability at its very heart so the measures we propose and i will give you details

Shortly are both targeted and time limited and they’re focusing on easing the liquidity stress that some energy companies have faced in meeting their margin requirements and on tackling the extreme price volatility on energy derivative markets in doing this we’ve worked really closely with our regulations so asthma and national regulators and sought their guidance

As to how we would do this mindful of the need to address the liquidity issues but clearly mindful of the need for financial stability i want to thank our finance ministers for their contribution and indeed our work with the european parliament is paramount to deliver so first i want to to deal with the trading side we’re proposing a temporary measure as part

Of the emergency instrument a so-called intraday price spike color now what this is about is smoothing excessive volatility and price spikes in gas and electricity derivative markets it is a price color that limits extreme changes in a short period of time and in that sense it’s not intending to prevent prices from moving upwards or indeed downwards but rather to

Ensure that these movements are more incremental than what we observed at some times over the past months eu trading venues for energy derivatives we’ll have to put such a tool in place by the end of january under the control of national and european regulators but in the interim period we will be asking eu trading venues to set up intraday volatility tools that

Would broadly achieve the same result my second point is around the issue of collateral we know some energy market participants have experienced pressures on liquidity because of higher margin calls linked to rising energy prices usually collateral is provided in the form of cash today we’re adopting a delegated act that expands the list of what these companies

Can use as collateral and we’re doing this on a temporary basis energy firms will be allowed to use on collateralized bank guarantees and all market participants will be allowed to use public guarantees again we’re following the advice of asthma on this and striking the right balance between helping energy operators and maintaining financial stability the third

Measure is also related to energy derivatives markets and this is an amendment to another um delegated act for energy firms using otc’s over-the-counter energy derivatives we’re raising the carrying threshold from 3 billion today to 4 billion euros and below this 4 billion year threshold firms using over-the-counter derivatives will not have to provide margins for

The bilateral trades and again this is in line with asthma’s recommendations reflecting the sharp price rises in energy derivatives on benchmarks i think how do you have covered that very well and we work together on achieving the proposal you have outlined and clearly also to encourage when the benchmark is in place that it is used so that will impact derivative

Markets as well i believe that what we are proposing today on the energy or rather the nexus between the financial markets and energy will make a real difference to energy operators and to energy markets and in the short to medium term that will help alleviate pressure on consumers and businesses who are experiencing energy price rises right now but at the same

Time we’re staying vigilant when it comes to financial stability thank you thank you very much

Transcribed from video
McGuinness presents EU plan to maintain financial stability and address the EURO liquidity issues! By EU Debates | eudebates.tv