Summary
In September 2009 the European Commission published its detailed legislative proposals for European reform. 'The Committee's Opinion on Proposals for European Financial Supervision (HC 1088)' reports on this proposed financial regulation and outlines a number of concerns.
The regulations proposed would establish a European Systemic Risk Board (ESRB), to undertake macro-prudential issues, and for a system of European Supervisory Authorities (ESAs), for Banking, Securities, and Insurance and Occupational Pensions. This would encourage greater consistency and co-operation between national regulators in their micro-prudential work as there are extensive links between the ESRB and the ESAs.
As reported in 'The Committee's Opinion on Proposals for European Financial Supervision (HC 1088)' the Committee welcomes the intention of the new regulations but has concerns about the details and the timetable seeking their adoption by Ecofin at the Council on 02 December 2009. The Committee considers that is far too fast: the proposals will set in place a framework which should last for many decades, and there should be proper time for consideration.
Causes of concern include:
- It is not clear how these proposals relate to global initiatives for regulatory reform.
- The size and composition of the ESRB.
- The extent to which it is desirable or possible to delegate discretionary powers to the European Supervisory Authorities.
- Unease about the potential power they will have to override the decisions of national regulators.
- Concerns that the Commission will have unilateral power to declare an emergency, which will give ESAs power to direct national regulators still further.
- The proposals do not appear to give due weight to Ecofin's conclusion in June 2009 which stressed that the measures 'should not impinge on the fiscal responsibilities of the Member States.'
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