EUROPEAN COMMISSION president José Manuel Barroso asked EU leaders to back a radical reform of Europe’s financial supervisory system yesterday warning it was a question of “now or never”.
“If we cannot reform the financial supervisory system when we have a real crisis, then when will we reform? It’s now or never that we build a consensus on financial supervision. I think we will do it,” said Mr Barroso at a press conference where he unveiled the commission’s proposals for reform.
The commission plans to create a series of new pan-European supervisory bodies to monitor the European financial system and cross-border financial institutions such as banks, insurance firms and credit ratings agencies to detect the build-up of risks. One element of the new system would provide a network of pan-European supervisors with the power to overrule national financial regulators not complying with common EU technical standards.
Britain has already signalled that it is concerned about some elements of the commission’s reform proposal, which follows closely the recommendations in a report on financial supervision by French banker Jacques de Larosiere.
The core of the commission proposal would see a new European Systemic Risk Council (ESRC) formed to identify risks to financial stability in Europe and issue warnings and recommendations to EU states. This would be chaired and hosted by the European Central Bank. A second network of financial supervisors would monitor the pan-European banking, insurance and pensions industries to try to identify potential risks to the system.
A British government spokesman said last night the commission proposals represented a starting point for further discussions. “Any reforms we make within the EU need to be workable, practical and consistent with the approach we are taking internationally through the G20.”
Internal markets commissioner Charlie McCreevy warned it would not be easy to implement the reforms as the current crisis had caused a tendency for some supervisors to think nationally.
But he said reform was needed now, otherwise the debate would end up going “round and round in circles”.
