Backing for a new two-tier supervisory system for financial markets

On 9 June 2009, the Ecofin Council expressed its support for a planned reform of the EU's financial supervision framework. Finance ministers stressed the need for ambitious measures to strengthen regulation and supervision, taking into account their own role in this area.

© Fotolia, Mijakowska

The reform is based on the vision set out by a high-level group chaired by the former managing director of the International Monetary Fund, Jacques de Larosière. Its central elements are the establishment of a European System of Supervisors and, for the first time, the creation of a European body to monitor risks to the financial system as a whole.

The proposed new architecture will work on two levels:

• A European Systemic Risk Board (ESRB) will continuously assess the stability of the financial system. Where necessary, it will issue risk warnings and recommendations to policy-makers and supervisors and monitor their follow-up.

• A European System of Financial Supervisors (ESFS) will comprise three EU-level supervisory authorities covering the sectors of banking, securities and insurance. They will work in a network with existing national supervisors, which are responsible for the day-to-day oversight of individual financial firms.

The suggested new regime will be submitted to heads of state and government, who will meet on 18 and 19 June, with a view to reaching a consensus. The aim is to have both components of the new system fully in place in the course of 2010.

More information:
Council conclusions(pdf) 
Council webcast of press conference 
Financial services supervision - Commission website