| The European parliament approved first reading | ||||||
The approval of a pan-European legal framework for the use of collateral will provide easier access to funding for corporates and reduce credit risk for banks. Despite French opposition, the Ecofin Council has endorsed the EU collateral directive.
This directive has been a priority for the European Commission's financial services action plan over the past year. It will assist in the development of the European capital markets by making cross-border activity legally secure and less complicated. Once approved by the European Parliament, member states will have 18 months to put the directive into national legislation.
Currently, the legal intricacies of the individual countries within the EU make cross-border collateral use difficult. "Such laws are 200-year-old legal techniques being applied to 21st-century finance," says Robert McWilliam, co-chair of the ISDA collateral committee and head of collateral management at ABN Amro.