Brussels, 24/05/2013 (Agence Europe) - On Friday 24 May, the commissioner for the internal market, Michel Barnier, highlighted the challenges that would need to be met if improvement is to be made to the 2010 financial supervision package. This package brought forward three supervisory authorities for the banks, securities markets and insurance and pension fund companies, just like the European Systemic Risk Board (ESRB). Barnier also provided assurances that banking union, including the Single Supervisory Mechanism (SSM), would not fragment the single market or weaken the role of the authorities that already existed. In order to improve the supervisory package, the Commission set up a public hearing to inform the debate. This hearing will come to an end on 19 July.
The Commissioner explained that, although major progress had been achieved since 2009, such as the improvement in the “coherence of practices by national supervisors”, particularly by involving the authorities set up in the supervisory bodies, certain challenges remained. The first involves ways of facilitating “the adoption of binding decisions by the (European) authorities” and enhancing the powers of investigation and mediation among the national authorities. The second point underlined by Barnier relates to macro-economic risks and whether these have been sufficiently taken into account. The authorities' governance and funding complete this list. The Commission also wants to explore the possible developments in the role of the authorities.
With the ECB acting as single supervisor, de la Rosière fears rise of a duopoly. Jacques de la Rosière, who chairs the experts' group charged with improving the system of financial supervision and regulation in the EU, said during the public hearing that it would be necessary to ensure the supervisory tasks conferred on the ECB do not result in the duplication of the work undertaken. He is afraid of a duopoly arising between the European Banking Authority (EBA) and the ECB and, therefore, advocates increasing the powers and independence of the EBA as a means of preserving the single market.
Barnier said that banking union, one of the pillars of which is the Single Supervisory Mechanism, would increase the need for the authorities that already exist. These will have to ensure greater regulatory coherence between the 28 member states and declared that, if 17 “were the only ones to have the large financial centres, it would definitely get noticed!” He highlighted the “single rule book” on which banking union would be based and whose objective is to harmonise the rules recently adopted. These rules constitute “the best weapon against the risks of single market fragmentation”.
The need for mediation from the agencies could prove even more necessary than in the past, given that the SSM “will inevitably be accompanied by the need to find new balances and sometimes mediate in possible conflicts”. Finally, the SSM will closely cooperate with the authorities that already exist. The vice-president of the ECB, Vitor Constâncio, said that the more member states that join the SSM the better financial supervision would function: better coordination, more consistent application of the rules and less market distortion risk. The ECB is also expecting many non-eurozone member states to join the SSM. Constâncio is also calling on them to give a clear indication of their intentions by July this year. (EL/transl.fl)