The president of the European Commission, José Manuel Barroso, has said he sees “light at the end of the tunnel” following the massive, co-ordinated rescue packages offered by EU and other governments in a bid to restore confidence in the world’s financial system.

“We have created nothing less than a [European] Community package for financial recovery and future sustainability,” Barroso said yesterday at a press conference whose overarching message was that an unprecedented crisis requires unprecedented actions and co-operation by the EU and the international community. Barroso stressed, though, that the international response to the crisis “remains a work in progress” and that joint European and international measures remain indispensable.

“An urgent priority now must be to further deepen co-ordination at international level, specifically with the USA,” Barroso said. He also backed the call made by French President Nicolas Sarkozy for an international conference on the crisis, which he said was the greatest since the Great Depression.

The “exceptional” nature of the crisis, which has prompted EU governments to commit €2 trillion, had also changed the Commission’s view of a provision that requires EU governments to keep their deficits at less than 3% of GDP. The Commission would, he said, allow deficits to rise above that threshold temporarily, but the Commission president added that he saw no need to suspend the EU’s Stability and Growth Pact, a fiscal framework that is intended to promote the gradual convergence of Europe’s economies. The deficit threshold is a key element of the pact.

A number of additional steps are likely to be taken when EU leaders meet at their regular, quarterly summit today and tomorrow. Among them, Barroso said, will be the formal adoption of a proposal to revise a directive on deposit guarantees, increasing the current minimum guarantee from €20,000 to €50,000. That change was agreed in principle by national governments on October 7th, with some countries indicating that they may guarantee bank accounts to the tune of €100,000.

The summit is also expected to embrace proposals to improve the regulation of credit ratings agencies and to the supervision of international banking groups. Barroso told reporters that European governments “need to remove the mismatch between European financial markets on the one hand, and purely national supervision on the other.”

Barroso is himself creating a high-level group of experts that will look into issues of cross-border supervision. It will be chaired by Jacques de Laroisière, a former managing director of the International Monetary Fund.

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