ESBG has concerns about the powers envisaged for the ESAs, in particular, its ability to impose binding decisions on individual institutions. It is of the utmost importance that the situations and legal relationships established by the new EU supervisory framework remain predictable.
General support for combining macro- and micro-prudential approaches
In light of the events that occurred in the financial markets during the past two years, the state of play in EU financial supervision appears unsatisfactory. There is now general agreement that measures need to be taken in view of creating a solid foundation underpinning financial stability in the EU. This needs to be done by repairing the shortcomings in the current supervisory system, and also by capitalising on the merits of those features that worked well (such as the crucial role of national supervisors in day-to-day supervision because of their proximity to and their better knowledge of the markets). ESBG welcomes the Commission’s efforts and member states’ political willingness to act in this direction.
ESBG agrees that the safety and soundness of EU financial markets can be ensured only by properly considering at the same time the financial health of individual institutions and of the system as a whole.
Consequently, ESBG generally welcomes the proposed creation of an enhanced European financial supervisory framework based on the mutually reinforcing macro-prudential and micro-prudential pillars. Hence, ESBG supports the general principles underlying the Commission’s proposals. At the same time, ESBG would like to draw attention to the fact that the concrete details fleshing out these principles are of the utmost importance.
Common rulebook
ESBG wishes to reiterate its long-standing support for the creation of a common supervisory culture in the EU. ESBG is of the opinion that, if properly designed, a single European rulebook containing one harmonised core set of standards can contribute to achieving the objective of a common supervisory culture. An adequate rulebook should result in more consistency in supervisory practices, whilst observing national specificities. Thus, it is important that the common rulebook does not amount to a rigid framework and pays due attention to the fact that day-to-day supervision remains at national level.
The European rulebook should not result in overburdening the industry with regulatory requirements.
This is particularly important for the smaller banks. Therefore, we suggest that proportionality is set as an overarching principle to guide further work on the rulebook. A common rulebook should envisage a “same risk – same rules” approach rather than “one size fits all”.
Furthermore, because of the attached legal consequences, it is of the utmost importance to clearly define what constitutes a binding technical standard. Technical standards should be firmly circumscribed to defining the conditions of application of the legislation falling within the scope of action of the three new Authorities. In addition, it should be made explicit that such standards cannot entail any policy choices, as this should be exclusively subject to the legislative process.
Legal certainty in relation to the powers of the ESAs
The debates surrounding the proposals on a new architecture for financial supervision in the EU often highlight concerns as regards the lawfulness of some of the powers envisaged to be granted to the ESAs. In particular, such concerns appear in relation to ESAs powers to impose binding decisions on individual institutions. It is of the utmost importance that the situations and legal relationships established by the new EU supervisory framework remain foreseeable and are firmly grounded in an unchallengeable legal base.
© European Savings Banks Group
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