Brussels, 29/05/2009 (Agence Europe) - Political groupings at the EP and the financial industry have generally reacted positively to the European Commission's suggested changes to the European financial supervision system (see EUROPE 9909).
Leading the way for the European Socialists in falling for tighter regulation and greater supervision of the financial world, Denmark's Poul Nyrup Rasmussen has welcomed the European Commission's willingness to take on board the “pragmatic and essential” recommendations of the Larosière Report in order to restore trust in the financial system. Rasmussen, erstwhile Danish prime minister, commented that “the real test will come when the European Commission presents its detailed proposals. The European Commission must resist the inevitable pressure from member states to water them down.” Werner Langen (EPP-ED, Germany) said that tangible measures should have been on the table a long time ago, and described the separation of financial supervision into two separate sections (micro and macro) as “right”. He said the German CDU/CSU MEPs in the next European Parliament would adopt a constructive attitude to the matter and called for the option of introducing a centralised EU financial supervision system to be examined in 2013. Vice-chair of the Greens/EFA, Germany's Rebecca Harms, was amused that the Commission's press conference had been cut short due to the second fire alarm going off (requiring full evacuation of the Commissions' headquarters) in two weeks: “Financial markets have been burning for months while the Commission's chief advocators of neoliberalism have refused to call for fire fighters. Their proposed limited measures will extinguish at least some excesses of the past, but the Commission must do more than fiddle to stop the financial markets from burning. Greens call for a fundamental overhaul of the proposals, based around a central European supervisory authority with real regulatory teeth.”
The European Banking Federation (EBF) backs the Commission's move to introduce better supervision structures in Europe and, describing the proposals as a realistic starting point for moving towards substantial reform, commented: “We draw attention to the necessity of a smooth and efficient functioning of the European Systemic Risk Council, despite a total of 62 participants in its meetings amongst which 34 are voting members. Developing a single set of core rules, ensuring efficient supervisory decisions are made, and coordinating information collection and exchange, both in normal and crisis situations, must be critical functions of the new European Supervisory Authorities. We note that the communication does not address the issue of burden sharing agreements. This should not serve as an excuse to prevent tangible progress in the area of supervisory arrangements in ordinary times.” The European Savings Bank Group (ESBG) believes “the future success of this new approach will depend on whether a proper mechanism is in place capable of ensuring that the macro-prudential risk analysis and early warnings issued by this body are transformed into appropriate prudential follow-up action. It is important that this network structure be independent, act within the limits of Community law and not constitute the basis for a future two-tier supervisory structure” (two-tier or twin peaks). The European Association of Cooperative Banks (EACB) commented: “The European Systemic Risk Council (ESRC) will provide for a macro perspective in supervision, which is urgently required. Designed as a highly complex institution, because of the large number of members and the complex decision making process, the ESRC will have to show that it can come to practical recommendations the ESRC would provide.” The European insurance and reinsurance federation (CEA) “calls for differentiated insurance supervision and insurer representation on the ESRC” because the needs of the insurance industry are different from those of banking. The CEA also calls for better representation of the insurance industry at the ESRC. The European Fund and Asset Management Association (EFAMA) commented: “It is crucial that separate European authorities are maintained for the three sectors” (Ed: CESR, CEBS and CEIOPS). The new European Securities Authority will ensure that the specific characteristics and business models of the securities sector are taken into account.” The European business confederation BusinessEurope has welcomed the European Commission's suggested changes, which should help restore confidence in the financial industry. (M.B./transl.fl)