At the informal finance ministers’ lunch meeting in Brussels on September 3rd, ministers of finance from the 27 Member States agreed on common EU positions on the key issues to be discussed at the upcoming G20 meetings in London and Pittsburgh, including financial market reform, strengthening international financial institutions, and combating climate change. Among the priority objectives of the Union is to end the "old culture" on bonus compensations to executives in the financial sector.

Ministers met in Brussels to try and come to a common EU position for the upcoming G20 meeting of finance ministers and central bank governors to be held on September 4th and 5th in London. The EU will be represented at the G20 meeting by the Swedish Presidency and the European Central Bank, as well as the member countries France, Germany, Italy, and the UK.

In this meeting, Economic and Finance Ministers noted that recent developments in the financial sector show that a risky and harmful bonus culture still prevails. Ministers underlined that sound compensation practices, where bonus payments are linked to long-term performance and excessive risk-taking is minimised, must be established. The EU urges G20 countries to commit to efficient measures towards banks not complying with the FSB Principles for Sound Compensation Practices in financial institutions.

Furthermore, ministers reaffirmed the commitment made by the EU at the London Summit to increase the resources available to the IMF. Building on the European Council conclusions, Member States in principle stand ready to take their share of further financing needs, as they arise over the medium term, in line with their economic weight.

From the outset, the EU has been a key driving force behind the G-20 summit meetings on restoring global financial stability and world growth. For the EU it is crucial that the agreements of the London summit are implemented swiftly and in full.

The EU is doing its share of the work. Among other things, the Commission has adopted proposals on hedge funds and private equity, to reign on excessive speculation and leverage, and made Recommendations on directors' and financial market remuneration. It brought forward more binding measures to ensure that financial institutions hold enough capital to cover their risks and an initiative on derivatives.

The European Council in June endorsed Commission proposals for a new system of financial supervision. Legislative proposals for the creation of a European Systemic Risk Council, to prevent risks to the financial system as a whole, and new EU level supervisory authorities to coordinate supervision of individual cross-border institutions are now expected shortly.

G20 Pittsburgh meeting

The main purpose of the Pittsburgh meeting will be to assess progress in meeting commitments made at the London summit of 2 April 2009, including notably on the reform of financial market regulation, and to discuss the macroeconomic situation and future global growth model in the light of the origins and consequences of the economic and financial crisis.

Regarding financial market reform, the key topics of Pittsburgh are expected to include prudential rules, remuneration policy and accounting standards.