Commission proposes to strengthen financial supervision in Europe

Further responding to the financial crisis, the European Commission has adopted a key legislative package today to strengten financial supervision in Europe. It envisages the creation of a European Systematic Risk Board (ESRB), which is to monitor and assess risks to the stability of the EU's financial system as a whole. Where necessary, it is to issue warnings and recommendations to prevent dangerous situations from materialising. The package also envisages the creation of a European System of Financial Supervisors (ESFC) along with the creation of three new European Supervisory Authorities.

These authorities for the banking, securities and pension sectors will be responsible for the coordination and facilitation of the work of national financial market supervisors. The current financial crisis has highlighted weaknesses in the EU's supervisory framework, which remains fragmented along national lines despite the creation of a European single market more than a decade ago. The new European supervisory system is designed to prevent the EU getting to the point reached in autumn 2008 where banks had to be bailed out. The package is being presented one day before the G20 Summit in Pittsburgh where a global reform of the financial markets will be high on the agenda.

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