Wednesday 26 May 2010

Tracking eurozone crisis measures: Financial supervision and better governance in motion

Even if the Greek aid package and eurozone stabilisation are the main focus of our tracking exercise, financial regulation and supervision are related areas worth mentioning.

On 12 April 2010 the European Central Bank (ECB) and the European Commission held a joint conference on financial integration and stability, the legacy of the crisis (IP/10/417).

The ECB president Jean-Claude Trichet reminded that the financial supervisory framework in the EU will be based on two pillars. The micro-prudential pillar, the European System of Financial Supervisors (ESFS), will be composed of the national supervisors and three European Supervisory Authorities (ESAs). The European Systemic Risk Board (ESRB) will form the macro-prudential pillar.

According to Trichet, the ECB stands ready to support the ESRB:

in particular taking into account the important presence of the members of the General Council of the ECB in the ESRB and the fact that the ECB will provide the secretariat and analytical, statistical, logistical and administrative support to the ESRB, as required under the legislative proposals. Preparatory work at the ECB has been organised through the setting up of an ad hoc team and is under way so that the ESRB can take up its work after its formal establishment. The ECB is in the process of enhancing its capabilities for monitoring and assessing financial stability risks. Only a number of weeks ago, we reformed our Directorate Financial Stability and Supervision into a Directorate General Financial Stability with more resources.

Internal market commissioner Michel Barnier’s speaking points (in French) stressed the need for proper regulation and supervision of integrated European financial markets.

Further reading: the Commission’s web page on financial services supervision.

On 15 April 2010, Olli Rehn spoke about reinforcing economic governance in Europe (SPEECH/10/160). The commissioner for economic and monetary policy said that the aim of the Europe 2020 strategy is to mobilise growth drivers in order to modernise our social market economies. The second pillar is the consolidation of public finances.

Rehn outlined enhancing economic policy coordination through three main building blocks: reinforcing the Stability and Growth Pact, deepening and broadening economic surveillance and setting up a permanent crisis resolution mechanism.

Ralf Grahn

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