European Commission publishes new proposals on EU Financial Supervision
24/09/2009

Further to recent initiatives undertaken by the European Commission in relation to the improvement of financial services supervision, the Commission adopted yesterday legislative proposals for new institutional arrangements on European financial supervision. The key proposals are:

• The establishment of the European System of Financial Supervisors (ESFS) which would transform the existing Level 3 Committees of Supervisors (CESR, CEBS and CEIOPS) into European Supervisory Authorities (ESAs) for the securities, banking and insurance and occupational pensions sectors, including the new European Securities and Markets Authority (ESMA) which would replace CESR.  The three new ESAs would take over the current functions of the Level 3 Committees, and take on additional functions including:

  Developing proposals for technical standards (the technical standards will now have the possibility of become binding law if formally endorsed by the Commission);

  Resolving cases of disagreement between national supervisors where legislation requires them to co-operate or agree;

  Contributing to ensuring consistent application of technical Community rules (including through peer reviews);

  Exercising direct supervisory powers for Credit Rating Agencies (the ESMA will have this responsibility); and

  A coordination role between national supervisors in emergency situations.

• The Establishment of a European Systemic Risk Board (ESRB) that would monitor and assess risks to the stability of the financial system as a whole.  It would provide early warning of systemic risks that may be building up and, where necessary, present recommendations for action to deal with such risks.  

The legislation has been forwarded to the European Council and Parliament for rapid action, and it is possible that the new structures could begin functioning in 2010. 

View proposals and information from the European Commission