European supervisory authorities: time for implementation!

2011/01/05

In 2010, it was decided to put in place a new European financial framework system and new supervisory authorities. The reform also involved a reorganisation of macro and microprudential supervisory authorities. It was aimed to provide more stringent risk surveillance both in the system as a whole and in individual financial services.

- the implementation of these new decisions started on December 16 in Frankfurt, with the creation of a new body, the European Systemic Risk Board (ESRB). The ESRB, managed by JC Trichet, President of the ECB, is in charge of overseeing the operation of the European financial at a macro level, by monitoring any system-level risk and identify any situation which requires a rapid intervention.

- In parallel, three new European watchdogs ( The European Banking Authority EBA, the European Insurance and Occupational Pensions Authority -EIOPA, and the European Securities and Markets Authority -ESMA, will replace the previous EU committees responsible for financial market services, having had only consultative competences. The new bodies, together with the European System of Financial Supervisors -ESFS, comprising member state supervisory bodies, will provide micro level surveillance by:

- investigating alleged breaches of EU law and, in certain circumstances, calling on national authorities to eliminate regulatory deficiencies and, in emergency situations, adopt individual decisions requiring the competent authorities to take the necessary measures.

- safeguarding the harmonization of national regulations, and contributing to the improvement of European regulations. By instance, ESMA will be in charge of the introduction of a standard European insurance statute and EBA will be responsible for developing the European rules of banking, payment and electronic payment services