Ministers push for supervision deal

MEPs offered concessionsin bid to secure a deal.

MEPs and governments are close to agreeing an overhaul of the EU’s supervisory architecture for financial markets, after member states this week offered concessions.

The reform, which is supposed to be a part of the EU’s efforts to prevent a repeat of the financial crisis, includes giving binding powers to three authorities supervising the EU’s banking, insurance and securities sectors, and the creation of a European Systemic Risk Board (ESRB) to monitor threats to the EU’s economy as a whole.

The European Parliament and the Council of Ministers want draft legislation to be agreed by September, leaving enough time for the three authorities and the ESRB to start work with their new powers on 1 January.

The European Commission is concerned that missing this deadline might harm the EU’s status within the G20 group of developed and emerging economies that is shaping global reform of financial market supervision. The Commission has repeatedly claimed that the EU is leading other G20 members in the adoption of financial reforms. The US, however, is expected to adopt its reform of financial supervision by the end of this month.

Threats to stability

The concessions agreed by finance ministers on Tuesday (13 July) include allowing the three authorities to give direct orders to financial institutions in cases where a national financial regulator fails properly to apply an EU law or technical standard. They also include giving the authorities the power temporarily to ban activities that they believe pose a threat to financial stability. Ministers also agreed that governments should be prevented from abusing a procedure that allows them to overturn decisions taken by the authorities.

The Council, the Parliament and the Commission said that the concessions had made an agreement in September a realistic possibility.

Michel Barnier, the European commissioner for internal market, said the Council and the Parliament were in the “last strait” of reaching an agreement.

José Manuel García-Margallo, the Parliament’s lead MEP on the legislation creating a European Banking Authority, said that the package of concessions was a “very big move from the Council” and “very near to what the Parliament asked”.

“It is a good basis for further agreement,” he said. But he said that some aspects of the reform package would require more discussion before a deal could be reached. These include whether the Council or the Commission should have responsibility for declaring a crisis situation (in which the authorities would gain extra powers). They also include how difficult it should be for member states to block a decision from one of the authorities.

The Belgian government, which holds the presidency of the Council of Ministers, held a first discussion of the concessions with MEPs yesterday (14 July). García-Margallo said that no further meetings would be held until September, to give the Parliament enough time to co-ordinate its response properly.