I thank the Chairman for his warm welcome and the joint committee for allocating time for this hearing. I also thank it for welcoming me to Ireland which I have visited many times, including when I was Commissioner with responsibility for regional policy and the PEACE programme and when I was French Minister for Agriculture, also a key issue for Ireland. I was also French Foreign Minister a few years ago. I am pleased to meet Members of the Dáil and the Seanad, as well as Ms Nessa Childers, MEP, and Proinsias De Rossa, MEP, who are very active Members of the European Parliament.
The reason I am here today is to show my personal respect for the national Parliament of every member state. I was a Member of the National Assembly of France and the French Senate for 20 years. My personal conviction is that the key to reconciliation between the European Union and its citizens is the national Parliaments. There is no need to convince me of the importance of strong dialogue with them, not only because they have new powers under the Lisbon treaty but also for the reason I outlined.
Ireland and its citizens are suffering more than most in the current crisis. My first message is, therefore, one of determination. It is clear to all that mistakes were made across all of Europe and that we must have the courage to learn from them. I am not here to give lessons but to learn the lessons of the crisis with members and to listen. I know the Government and the Parliament are taking courageous measures and I am confident there is light at the end of the tunnel. The second message I wish to convey is that I believe Ireland's future lies at the centre of Europe and that the European Union can help it. Make no mistake, the answer to the current difficulties in Ireland and elsewhere in Europe must not be a retreat from common aims, policies and solidarity. It should be the opposite. If there is one lesson to be learned from the past years, it is that we are all in this crisis together.
During the course of the day I will meet the Government, the Central Bank and the financial regulation authorities, as well as representatives of civil society and business. I come to them with an extended hand and two simple messages on the priority of my portfolio as Commissioner for the Internal Market and Services: first, we must put our financial house in order and, second, we must kick-start growth with a renewed and revitalised internal market. To be frank, my goal is to put the financial markets, which we need, at the service of the real economy, not the contrary. The second strategy is to put the real economy at the service of the people for growth and human progress, not the contrary, as we saw perhaps too much in the past 15 years. I will speak further about these two priorities. We must put our financial house in order. More than two years after the collapse of Lehman Brothers, we are not yet out of the woods. We need a new, safer financial system in the interests of the real economy, ordinary people and companies, both big and small. Progress has been made, but we are not yet there. We are continuing to move as fast as possible.
On the basis of the G20 commitments, we are in the process of implementing an ambitious agenda for reform. There are five main principles and some key proposals, the first of which is effective supervision and enforcement of the rules. As of 1 January 2011, there will be real Europe-wide supervision of the financial sector, thanks to the Belgian Presidency and the work of the European Parliament. There is the creation of three new authorities for banks, insurance and the securities markets. Above these three authorities is the new European Systemic Risk Board.
The second principle is full transparency. Complexity has for too long been an excuse for opacity. I can offer two examples. In the derivatives markets 80% of the current trade worth $600,000 billion takes place over the counter, with full opacity. This raises serious potential systemic risk. Second, last spring all eyes were focused on the Greek debt crisis. I am not saying markets lie, but what we saw was that a country's capacity to finance itself on international markets was severely affected by movements on credit default swaps, CDS, markets and short selling. We had no detailed information on what was going on or what trade was taking place. These issues are at the heart of the proposals the Commission presented in September to regulate over the counter, OTC, derivatives and short selling. They are about greater transparency across the board.
The third principle is greater stability in the financial sector. With Basel III, common equity requirements will rise from 2% to 7% of assets. Total capital requirements will, for the first time, pass the bar of 10% of assets; it is more capital and of better quality. There is the same thing for the insurance sector with Solvency II.
The fourth principle is more responsibility. Let us be clear that at the root of the current crisis are unacceptable corporate governance practices.
That is why we must bolster corporate governance rules. This includes better supervision of senior management by the boards of financial institutions and increasing the involvement of shareholders.
Policies on pay must give staff and management the right long-term incentives for sound management and discourage excessive risk taking. That is why new rules were introduced in binding EU legislation earlier this year. We also need to look at further into certain issues of conflict of interest, notably in credit rating agencies and audit firms.
Last but not least, better foresight and sound rules are required for crisis prevention and management. This is the first part of my job and it is directly in line with the G20 roadmap. I am also involved in ensuring that what we are doing in Europe is in parallel with what the United States is doing. I returned yesterday morning from a six-day working trip to the United States where I met the US Treasury Secretary, Mr. Timothy Geithner, as well as all the regulators and supervisors in the banking sector. It is an important goal for me to ensure that we will implement the G20 roadmap, not with the same tools and laws, but at the same time.
We need to relaunch growth, and a better-functioning Internal Market can help us to do that. I spoke of determination in my introduction, so let me now say a few words about the Single Market. I believe the people of Ireland know the answer to the question of what the Single Market has delivered for this country since 1992. The Single Market was a key reason for the Irish economic boom of 1996 to 2008 because it provided a level playing field and a much bigger playing field than Ireland ever had access to before. This allowed the country to attract investment. It developed quickly, even catching up and overtaking the rest of Europe. Ultimately, what will help to turn the Irish economy around again are exports and access to the larger European market.
I believe in the Irish character, your competitive economy, your openness to the world and readiness to adapt. Ireland has what it takes to win in the long term. Now, however, we are beginning to get the growth where it is to be found. With the Single Market working in a better way, we can get 2% or 3% more growth. That is why, a few weeks ago, the Commission made 50 proposals. I want to open up a real, European public debate on these proposals, which is why I will be sending Ireland the same document as the other 26 member states. The Single Market Act is an open document. I have worked with 12 of my fellow commissioners - including Ms Geoghegan-Quinn, who has responsibility for research and innovation - to devise this action plan. We will now open the debate on these 50 proposals. At the end of this debate in February 2011, we will have a meeting of the European Council. The European Commission will act on the definitive proposals and will engage in delivering upon them over the next two years. The year 2012 will mark the 20th anniversary of the Single Market. We do not want this anniversary to be either nostalgic or melancholic. We cannot do politics with nostalgia; we want this anniversary to be proactive and dynamic. That is why we attach so much importance to the Single Market Act. We will be pleased if the Irish national Parliament can, like the European Parliament, play its part in this public debate.
I thank the members of the joint committee for their attention. I am ready to answer questions and if the committee members do not mind, it would be easier for me to answer in French in order to be more precise.