EU task force to examine German move

City A.M. Reporter
EUROPEAN Union finance ministers will discuss Germany’s short-selling ban and coordination of such market-moving decisions in the EU on Friday, European Union president Herman Van Rompuy said yesterday.

Germany did not consult on its decision late on Tuesday to introduce a ban on some short-selling of bonds, stocks and transactions in credit default swaps with its EU peers.

The move has pulled the rug from under the euro currency which is shared by 16 countries.

“Close cooperation in the EU on all issues which have a strong market impact is very important and needs to be strengthened,” Van Rompuy told a news conference in Madrid.

“I intend to raise this matter at the meeting of the task force [of EU ministers] that I will chair this Friday.”

EU finance ministers -- the Task Force -- meet on 21 May in Brussels to come up with proposals on how to toughen EU budget rules and improve economic governance so as to avoid a repeat of the Greek crisis.

“We will discuss this topic and other topics starting from Friday,” Van Rompuy said.

“We will have an intermediate report for the European Council in the middle of June and we will finalise our work for the European Council in October,” he said.

Germany has announced a ban with immediate effect on naked short selling of Eurozone government bonds and in shares of the country’s 10 leading financial institutions. It also banned naked transactions of credit default swaps (CDS) linked to euro government debt.

Germany’s financial regulatory body, BaFin, explained that the bans were “due to the extraordinary volatility in government bonds in the Eurozone”.