European Union internal market commissioner Charlie McCreevy, at the opening of Wachovia Bank's European headquarters on Oct. 26, noted that the firm's selection of Dublin for the office was likely related to the city's "favorable fiscal and regulatory environment." Using that point as a springboard, McCreevy talked about the regulatory framework of the EU in general, and how it has performed in the face of the downturn in the credit markets. A lesson learned in the case of U.K. mortgage lender Northern Rock, he said, is that transparency, while useful when applied to opaque financial instruments, can have a negative impact on investor confidence. "Transparency requirements have many dimensions within the financial market regulatory framework," he said, but "when the stability of a financial institution is at risk, the situation is best resolved behind closed doors."
Over the past decade, the financial services industry has had to put in place an expensive and extensive regulatory framework to stimulate competition, to underpin financial stability, to deliver an appropriate level of investor protection and to strengthen the integration of European markets. In most respects it has been a great success and points up the value of open consultation and principles-based regulation.
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