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Wrangling over European supervisory framework rumbles on

Sunday 28 March 2010 - by Judith Becker

Can the European Commission and the European Parliament agree on proposals for a new supervisory framework?

The financial crisis has led to increased activity in the field of supervision and regulation of the financial sector, not only in the European Union but also globally.

Different ideas are being discussed, however, the improvement of the financial supervisory architecture did not just appear on the EU agenda with the financial crisis.

Efforts were started a couple of years ago and one of the driving forces behind this effort has been the European Parliament, which has already in 2006, through an own-initiative report, and in 2007, through an oral question concerning crisis management, called for more activity in this particular field.

The arguments used in the report “Towards further consolidation in the financial services industry” foreshadowed many developments that came to pass during the financial crisis.

For example, it says: “It is high time that the EU institutions, and particularly the Parliament, opened a debate on the structure of supervision of EU financial markets [and] the implications of the consolidation of markets and financial institutions, prudential supervision, financial stability, and crisis management.”



As is often the case however, a crisis situation was necessary to achieve real progress.

Accordingly, the last 14 months have seen a flurry of activity on the European level starting with the proposals of the de Larosière group and the subsequent communication from the European Commission, which endorsed the recommendations.

A couple of months later, in September, the European Commission presented concrete legislative proposals to strengthen financial supervision. The aim of this package is to: “sustainably reinforce financial stability throughout the EU; to ensure that the same basic technical rules are applied and enforced consistently; to identify risks in the system at an early stage; and to be able to act together far more effectively in emergency situations and in resolving disagreements among supervisors”.


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