EU takes historic step to stop banks betting on hunger
Anti-poverty campaign group the World Development Movement has hailed the decision as a historic step forward, but said that the British government’s opposition to tough controls has resulted in serious loopholes in the regulation. In particular, limits will be set at national rather than EU level, which campaigners say risks a regulatory ‘race to the bottom’ as countries could compete to set weaker limits.
The group is urging the European regulator ESMA to ensure that the new rules are implemented effectively, and not watered down further by industry lobbying.
Goldman Sachs, Barclays, Deutsche Bank, JP Morgan and Morgan Stanley together made an estimated $3.6 billion between 2010 and 2012 from speculating on food including wheat, maize and soy. Speculation increases price volatility and has been a major factor in the sharp spikes in global food prices of the last six years.
‘Public outrage over food speculation has been huge and the fact that the EU has listened to that anger is a victory for public pressure,’ says Nick Dearden, the director of the World Development Movement. ‘But the UK’s role in watering down the regulation has been a disgrace. The Treasury has put the profits of banks like Goldman Sachs above the basic human need for food, with the result that the new rules could be too weak to be effective. Yesterday’s agreement is a good step forward, but now we need to make sure the limits are set at a level that properly tackles excessive speculation.’
The new rules on food speculation are part of a major piece of European financial reform, the Markets in Financial Instruments Directive (MiFID). Once it has been officially approved by MEPs and EU finance ministers, it must be incorporated into national legislation in each of the 28 EU member states.
Miriam Ross is Media Officer for the World Development Movement.
For more on food speculation, read issue 447 of New Internationalist.
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