Financial supervision
September 23, 2009
The blueprint presented on Wednesday in Brussels calls for an overhaul of the way financial markets across the EU are governed and for a new pan-European system of financial supervision.
"This European system can also inspire a global one and we will argue for that in Pittsburgh," European Commission President Jose Manuel Barroso said.
"Our aim is to protect European taxpayers from a repeat of the dark days of autumn 2008, when governments had to pour billions of euros into the banks," he added.
Better supervision across national borders
The draft laws proposed by the EU commission call for the creation of a banking super-watchdog. The European System of Financial Supervisors (ESFS) would be composed of national supervisors from each member state.
Separately, the proposal suggests the creation of a European Systemic Risk Board (ESRB) to identify risks for the European financial system and to make recommendations to individual countries about what to do.
The board is to review economic and business trends across the EU spotting dangerous developments, from unsustainable levels of government and private borrowing to rapid exchange-rate shifts.
"This package represents rapid and robust action by the Commission to remedy shortcomings in European financial supervision and will help prevent future financial crises," the EU's Internal Market Commissioner Charlie McCreevy said.
Berlin welcomes the new proposals
The German government has welcomed the proposal as a "good basis for future discussion." A statement by the German finance ministry said that financial supervision across national borders was a central element of better control of financial markets and increased transparency.
Critics of the EU's proposal warn that the new institutions would lack the power to force national governments to actually change their policies. The supervisors "should be more than a mere club of regulators. They should have real power," Martin Schulz of the Party of European Socialists (PES) said.
Before the new rules can come into effect, they will need the approval of the European Parliament and the 27 member states.
Backing from Britain will be crucial if the new legislation is to be up and running as planned by the end of the 2010. With London being Europe's biggest financial hub, the UK has so far been reluctant to give more say to European institutions.
ai/dap/Reuters/AFP
Editor:Michael Lawton