Internal market commissioner Michel Barnier added three more steps in his plan to protect consumers in Europe from a future financial crisis, aimed at the investment and banking sectors, the main areas in which the United States has struggled. The steps include; an investor compensation schemes, an insurance compensation scheme, and a deposit guarantee scheme. The main goal is to provide confidence in the financial system in Europe. This would provide automatic payment in the case a financial institution cannot guarantee deposits up to 100,000 euro, amongst other things. The goal is not to protect consumers against free market take-overs by corporations, but rather to protect against fraud, neglegence, and incompetence.
How would you compare the effectiveness of this method to the current system that we have in the United States (or other countries)? With situations such as Bernie Madoff's Ponsi scheme in America, many of those investors were left with nothing, but regulations such as these in Europe protect consumers. The article gives little details that will be released later, but are these the right steps for Europe in reacting to the financial crisis in the U.S.?
1 comment:
These are definitely the right steps for protecting consumers in the wake of a future financial crisis. This is a much better idea than regulating the entire financial system. It will still give confidence to consumers and will prevent businesses and individual investors from acting unethically.
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