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23 Jun 2009
European Union (EU) heads of government have agreed to establish a new Europe-wide system of financial supervision, imposing arbitration on national regulators disagreeing over controls of cross-border banks and other financial organisations.
The decision follows tough bargaining at Friday’s EU summit in Brussels between Britain – which wanted to minimise EU controls over its financial sector - and France and Germany, which favoured a strong European financial watchdog.
The compromise will see the European Commission bring forward legislative proposals to create three new ‘European Supervisory Authorities’.
Charged with upgrading national financial supervision within the EU the authorities would act through the creation of supervisory ‘colleges’ for large private institutions (as suggested at the recent G20 meeting in London) and establishing a 'European single rule book applicable to all financial institutions', said the summit communiqué.
These authorities would have 'binding and proportionate decision-making powers' to force national regulators to comply with these EU rules. They would also have power to adjudicate 'in the case of disagreement between the home and host state supervisors' of a cross-border financial institution, and also 'supervisory powers for credit rating agencies'.
The summit also backed creating a European Systemic Risk Board monitoring and assessing threats to EU financial stability, issuing risk warnings and recommendations for action.
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Visitor comments Add your comment
Financial regulation - compromise?
To describe the outcome as a compromise between the policies of France-Germany and Britain is an inappropriate use of the word. Under EU decision making we cannot protect our key business sectors and it is time the politicians admitted to us they have given away our self-government.
Euroland does not recognise the benefits of open markets and they resent anything which is uniquely successful in Britain and outside their control. The consequences for our standard of living are likely to be sever and permanent. Compared with these losses, the effect of government spending cuts after the next election are insignificant.
Posted by: Andrew Smith, 01 Jul 2009 | 00:00