26 April 2013

Commission consults on the European System of Financial Supervision

The regulations establishing the European Supervisory Authorities (ESAs) and the European Systemic Risk Board (ESRB) include provisions for the Commission to review their structure and performance within the ESFS and the ESFS as a whole. Today the European Commission services are launching a consultation on the European System of Financial Supervision.

Since the beginning of the crisis, the European Commission has tabled around 30 proposals to improve regulation of the financial system and benefit the real economy. In September 2009 the Commission brought forward proposals to replace the EU's existing supervisory architecture with a European System of Financial Supervision (ESFS), consisting of three European Supervisory Authorities – the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA), and the European Insurance and Occupational Pensions Authority (EIOPA).

The three European supervisory authorities (ESAs) and the European Systemic Risk Board (ESRB) were established as from January 2011 and their main role is to upgrade the quality and consistency of national supervision, to strengthen oversight of cross-border groups, to establish a European single rule book applicable to all financial institutions in the financial market as well as to prevent and mitigate systemic risks to the financial stability of the Union. The 27 national supervisors are represented in all three supervising authorities.

Individual ESAs have specific roles: for example ESMA is the EU supervisor of credit rating agencies, while EBA and EIOPA carry out "stress tests" of their respective sectors. ESMA can ban products that threaten the stability of the overall financial system in emergency situations. In addition, the ESRB has been tasked with the macro-prudential oversight of the financial system within the Union. The political agreement by the European Parliament and the Council on establishing a Single Supervisory Mechanism, with a core role for the European Central Bank (ECB), constitutes a first step towards a banking union. The ECB will carry out its tasks within the framework of the ESFS and will have to closely cooperate with the ESAs, in particular with the EBA. The legislative acts establishing the ESFS provide for a review by the Commission of the ESRB by 17 December 2013 and of the ESAs by 2 January 2014.

The consultation is open to all stakeholders and will be available in all EU official languages. It will run until 19 July, 2013. The results will provide important information on the effectiveness and efficiency of the ESAs and the ESRB within the ESFS and on the ESFS as a whole and will help the Commission to prepare the relevant reports.

EXME 13 / 26.04

Consultation

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