ECOFIN: EU Reaches Deal On Financial Supervision
By Adam Cohen
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Of DOW JONES NEWSWIRES BRUSSELS -(Dow Jones)- European Union finance ministers on Wednesday reached a compromise on a new supervisory framework for the bloc’s financial markets. Under the plan agreed by the ministers, the EU will create two new supervisory groups for financial markets: a “macro-prudential” body to study big-picture risks to stability and three “micro-prudential” groups to look at specific issues in the banking, securities, and insurance and pension sectors.
The U.K., home to the EU’s largest financial center, was worried about ceding control over the City of London to a powerful new EU committee. It also wanted to ensure its taxpayers wouldn’t be forced to fund bailouts for banks operating across the bloc’s borders or spend money on other measures.
The three groups supervising the regulation of specific industries will be responsible for harmonizing the rules and methods applied by national authorities. They will also have the authority to resolve disagreements between countries and to coordinate action in a crisis, albeit with certain limits. The EU finance ministers agreed that the supervisory groups can’t dictate how EU governments spend money and outlined an appeal procedure for states that think a regulatory decision will affect their national purse.
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