Authors Iain Begg | Gabriel GlÃ¶ckler | Anke Hassel ... - The Europaeum

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mortgage banks and the insurance sector. Credit derivatives, structured products and securitisation can transmit credit risk between banking and insurance sectors. Segmentation of supervision by type of institution introduces distortions when various financial institutions perform very similar functions. In several EU countries, however, particular sectors of the financial market fall in a regulatory and supervisory vacuum. There is a strong argument to be made in support of single, integrated, crosssectoral financial supervision, including the insurance industry, like in the case of the British FSA or the German BaFin. Towards integrated financial supervision The existing “Level 3” committees under the Lamfalussy Process 12 have advanced some degree of closer supervisory cooperation. They bring together national supervisors in regular interaction, aiming to generate convergence of cross-national supervisory practices and simplify compliance with regulatory and supervisory requirements, particularly for large pan-European conglomerates. Without a stronger structure, however, such convergence would be very unlikely to emerge. Level 3 committees operate by consensus rather than majority vote, guidelines are non-binding, and tend towards lowest common denominator compromises seeking to preserve national practices. Thus, while a further deepening of Level 3 cooperation would be welcomed, there are clear limits as to the ability of Level 3 structures to overcome supervisory fragmentation. The “college” solution For major cross-border banks (and as an alternative to establishing a single European regulator) mandatory “colleges” of national supervisors have been proposed for European banking and insurance regulatory groups. The college, comprising all supervisory agencies in whose jurisdiction any European financial group has sizeable operations, would be chaired by a lead (i.e. home) supervisor, acting as the single point of contact for the financial group in question. However, this could only provide a solution if the head of the college (home supervisor) has the authority to ensure that its members exercise their separate sovereign powers identically so as to produce the effect of a single regulator for a cross-border group. 13 In other words, the “college” solution can only be effective provided that arrangements are identical in terms of supervisory practice (which would require a “hard” legislative basis such as EU-wide regulation), and that the lead supervisor is equipped with a “buck stops here” authority. However, the initiatives of the lead supervisor are not immune to generating significant cross-border externalities. Most 36 After the crisis: A new socio-economic settlement for the EU
importantly, the “lead supervisor” regime opens the possibility for different regulatory practices across jurisdictions, violating the principle of competitive neutrality unless some central control is established. Thus the “college” solution is inadequate. A European System of Financial Supervision (ESFS) Regulatory fragmentation can be feasibly addressed by a gradual but speedy transition to a European System of Financial Supervision (ESFS), parallel to the European System of Central Banks (ESCB). Both the Turner Review 14 and the de Larosière Group 15 agree on the need to replace the Level 3 Lamfalussy committees with a new EU independent regulatory institution. The primary responsibility for supervision of individual firms would continue to remain at the national level. Under de Larosière, the ESFS would transform and upgrade the Level 3 Lamfalussy committees into three new independent European Authorities (for Banking, Securities and Insurance respectively), which would be granted legal powers on the adoption of binding supervisory standards. 16 After a 2-year transitional period, in which colleges of supervisors would be set up under ESFS for all major cross-border institutions, the ESFS would begin to function as a fully fledged integrated independent EU institution, comprising the three authorities. In late September 2009, the Commission finally adopted draft legislation incorporating the de Larosière recommendations; it establishes a European Banking Authority, a European Insurance and Occupational Pensions Authority, and a European Securities and Markets Authority. The boards of the latter would consist of the chairs of the national supervisory authorities. The three European Authorities would be equipped with their own autonomous budget. Their chairpersons would be appointed for an eight-year term, approved by the Commission, the European Parliament and the Council, and accountable to the EP. Their competences should include legally binding supervisory standards and mediation between national supervisors, coordination and oversight of colleges of supervisors, licensing and supervision of specific EU-wide institutions such as credit rating agencies, binding cooperation with the ESRC to ensure adequate macro-prudential supervision, and a coordinating role in crises. The ESFS should enjoy institutional guarantees of operational independence vis-à-vis governments, regulators, and other EU institutions, thus retaining final authority for interpreting and implementing EU Chapter 2 – George Pagoulatos 37
Page 1 and 2: Authors Iain Begg | Gabriel Glöckl
Page 4 and 5: Published in 2009 by Policy Network
Page 6 and 7: 4 After the crisis: A new socio-eco
Page 8 and 9: 6 After the crisis: A new socio-eco
Page 10 and 11: Simona Milio is associate director
Page 12 and 13: Chapter 10 Simona Milio ...........
Page 14 and 15: Before the crash: the EU as a parti
Page 16 and 17: liberalisation. The City of London
Page 18 and 19: of the Financial Services Action Pl
Page 20 and 21: confidence and world trade, to whic
Page 22 and 23: following the ECJ’s controversial
Page 24 and 25: signals are in place to promote a n
Page 26 and 27: need to be constructed to create ac
Page 28 and 29: or indeed re-impose, what they rega
Page 30 and 31: Markets with rules The overall conc
Page 32 and 33: 30 After the crisis: A new socio-ec
Page 34 and 35: Target financial stability The EMU
Page 36 and 37: Belgium, the Netherlands and Luxemb
Page 40 and 41: financial market rules. The ESFS au
Page 42 and 43: prudential regulation - though only
Page 44 and 45: initiatives vis-à-vis ratings agen
Page 48 and 49: Even if membership in a monetary un
Page 50 and 51: emained relatively contained to spe
Page 52 and 53: The second channel of functional sp
Page 54 and 55: But even so, the depth and intensit
Page 56 and 57: governance in the EU and the euro a
Page 58 and 59: in the EU show, authorities at the
Page 60 and 61: factors will remain prevalent and b
Page 62 and 63: centralised decision-maker. Similar
Page 66 and 67: (GNI), the interests of the member
Page 68 and 69: terms only very slowly and as a per
Page 70 and 71: policy proposal asks itself what th
Page 72 and 73: ensure that a ceiling is put on the
Page 74 and 75: Reform of EU expenditure Spending 4
Page 76 and 77: The medium-term financial framework
Page 78 and 79: unanimity. The need to obtain the c
Page 80 and 81: therefore, was weakening the Europe
Page 82 and 83: for the signing of the strict and d
Page 84 and 85: Since then, member states have name
Page 86 and 87: in the world monetary system. It al
Page 88 and 89:
a Treaty that not only ignores trad
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88 After the crisis: A new socio-ec
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Firstly, they should include policy
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emanate from demographic trends. Ho
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Furthermore, the Lisbon agenda may
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Strengthening, if not really crafti
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incentives in the welfare schemes a
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security, yet at a lower cost than
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102 After the crisis: A new socio-e
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asis only in the 1990s, and over th
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in an increasingly global age the
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So what kind of social role for the
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effective common policies in areas
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help by ensuring a thorough audit a
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irrespectively of benefit and costs
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to the European Innovation Scoreboa
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flexible labour regulation than cou
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to cope with change is germane to a
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average job tenure figures in the E
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(74), and road vehicles (78). On th
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Towards a less dogmatic approach Wh
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will be reinforced rather than cont
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Where do we come from? The EU agend
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However, so far the flexicurity app
Page 138 and 139:
existing practices of wage subsidie
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minimum wage tend to have higher pr
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commitment for employment”, 18 un
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provisions for minority protection,
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eflected in the objective of the Li
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instruments have been criticised fo
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However, the countries’ planning
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ich developed country pre-occupatio
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emerging markets (indeed the rules
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Energy and carbon use depend on fou
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concentrate on the size of the cake
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esurgence of long-term unemployment
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22 Financial Services Authority (FS
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7 This idea is not new. The 1970 We
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33 Arpaia, Alfonso, Declan Costello
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9 See Garabiol-Furet, M.-D. (2006)
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Chapter 11 1 Victor, D.G. (2006)
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Authors Iain Begg | Gabriel GlÃ¶ckler | Anke Hassel ... - The Europaeum

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