Substance

Finally, the lack of consensus on the future shape of Europes financial markets is truly out in the open. Last week saw an open discussion on the future supervisory models of Europes financial markets, with particular reference to the issues of macro and micro prudential supervision, the roles of various types of supervisor, as well as the potential for collaboration and information-sharing. The main point of contention is about how far-reaching the powers of the European Systematic Risk Council - the macro-prudential authority should be. The sticking point rests around the scope of the power that the ESRC is granted, as well as its governance structure. Essentially, the UK, Germany and Spain will not agree to proposals that furnish the ERSC with powers that would enable it to take decisions and evolve national supervisors into its agent without their involvement in such decisions.How we move from this stalemate is anyones guess. The European Commission has set itself an initial deadline of 27 May by which date it has committed to publish its initial proposals on an agreed supervisory structure, after which it proposes to formally present its proposals in mid June. With that being only just over a month away, most commentators, me included, believe this may be too ambitious. The real danger is that should consensus not be reached by the time of the mid-June summit, further debate will ensue and the momentum for the de Larosiere report will be lost. Irrespective of what your political view is, a lack of progress in this area will not be helpful to Europes ability to compete on the international stage.During the next few weeks we can expect to see some frenetic lobbying from all camps involved in these discussions. Hopefully, I will be pleasantly surprised and we will reach a consensus on the governance and powers of the European Systematic Risk Council. Only time will tell.

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