European Commission President Jos Manuel Barroso has called for a new framework that aims to enforce regulatory standardisation across the European Union.
According to a statement by the EC, the legislation will create a new European Systemic Risk Board (ESRB) to detect risks to the financial system as a whole with a critical function to issue early risk warnings.
The ESRB will be an early warning system to marco problems. The micro risks will be addressed by the European System of Financial Supervisors (ESFS), which will consist of a network of national financial supervisors, who will work with the three new European Supervisory Authorities; the European Banking Authority, a European Insurance and Occupational Pensions Authority, and a European Securities and Markets Authority.
The chief regulators and central bankers will all participate in the ESRB, and all EU Member States will have to report to the ESRB and the three European Supervisory Authorities. The ESRB will be able to issue warnings to Member States, although the statement did not say how these warnings will be implemented.
Barroso said “Financial markets are European and global, not only national. Their supervision must also be European and global. Today we are proposing a new European supervisory system, with the political backing of the Member States and based on the de Larosire report. 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. This European system can also inspire a global one and we will argue for that in Pittsburgh”.
Leaders of the G20 are meeting in Pittsburgh later this week.
Giles TurnerNews Editor