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The review of the current prudential supervisory architecture should take as a starting point the ultimate objective of achieving a pan-European financial supervisory framework to support a single financial market, the EBF says in a letter to Jacques de Larosière President, High Level Expert Group on Financial Supervision. “In any future pan-European framework the prudential supervision of each institution should be consistent across countries and proportionate to the degree of systemic risk“, the EBF continues.
Oversight and co-operation should address not only regulated institutions but also non-regulated institutions, markets, market infrastructures and other systems that are perceived as systemically relevant in the respective jurisdictions. Priority should be given to achieving rapid convergence to a single internationally accepted set of high quality accounting standards, accounting guidance, auditing practices and rules on provisioning.
Colleges of supervisors should help reducing regulatory duplication and improve the bilateral dialogue, EBF says.
The introduction of a leverage ratio is undesirable, EBF states. Also, market participants should decide on and develop best practices to enhance Pillar 3 disclosures, and regulators should support the industry in developing a range of practices.
However, in terms of financial stability a European Financial Stability Forum should be created that communicates to the Council of Economic and Monetary Affairs.
The full letter is attached below.