Strengthening supervisory powers at EU level is important but these reforms absolutely must be aligned with global initiatives, given that major European banks are also acting globally.
He structured his speech around two questions:
· How to ensure appropriate cooperation between national central banks and supervisors in the EU countries where these functions are segregated. This implies that a close cooperation between central banks and supervisors is essential. Central banks have an undisputed responsibility in the field of financial stability. They can benefit from their traditional focus on systemic risk and, especially, from their knowledge of area-wide developments in the money and securities markets and in payment and market infrastructures. Establishing close cooperation with supervisors ensures that synergies between these central bank and supervisory activities can be exploited. In addition, close cooperation enhances the efficiency of the supervisory system by reducing overlaps of work. In fact, one lesson from the current crisis is the need for a close interaction between micro- and macro-prudential analysis.
· 3 Success factors for level 3 committees evolving towards 3 EU authorities. There is a need to avoid blind spots as well as inefficient overlaps in the competencies and the practical work of the various institutions involved in the supervisory process, both at national and EU level. According to the ECOFIN conclusions, the “European System of Financial Supervisors” should be established as an operational network with shared and mutually reinforcing responsibilities. The objectives of the new framework, according to the ECOFIN/European Council, are to upgrade the quality and consistency of national supervisors; to strengthen supervision of cross-border groups, in particular, by setting up supervisory colleges for all major EU financial groups and by moving towards a single rule book.
There was a political consensus to upgrade the three committees to authorities with specific powers, including some binding powers over the national supervisors. However, the current Commission proposal goes further, giving the three authorities direct powers to take decisions that affect the industry. Apart from the legal issues this raises, this approach risks establishing a parallel system of national responsibility – which, incidentally, ECOFIN is in favour of maintaining – and decisions from a supra-national authority. Taking due account of the fundamental principles of subsidiarity and proportionality, it would be more appropriate to address recommendations to the national supervisory authorities only under the terms of the earlier consensus.
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