Monday

20th May 2019

Europe seals deal on financial supervision

  • MEPs gave their final approval to the package on Wednesday after earlier reservations (Photo: EUobserver)

MEPs have backed a package of EU legislative proposals on financial supervision, the final approval needed for the 27-member bloc to set up a new system of financial watchdogs, designed to guard against a repeat of the recent financial crisis.

Sitting in plenary in Strasbourg on Wednesday (22 September), the euro deputies passed the new legislation by a large majority after months of political wrangling with member states, primarily the UK, which proved less keen on the new EU-level bodies due to fears they could impinge on national sovereignty.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

"This is a historic watershed moment," Belgian finance minister Didier Reynders said before the vote. As holders of the EU's rotating presidency, Belgian officials have been conducting difficult talks with representatives of the European Parliament over the past few months in a bid to narrow their differences.

Following proposals from the European Commission, member states reached a political agreement last December, but MEPs were quick to voice their opposition, brandishing the deal as overly watered-down and riddled with vetoes.

Wednesday's vote on a compromise text means three new European Supervisory Authorities (ESAs) will start work in January next year, co-ordinating national supervisors in the areas of banking, pensions and financial markets.

Part of their role will be to improve the flow of information between national regulators, after the financial crisis in 2008 exposed the vulnerability of national financial systems to the collapse of large cross-border firms.

"Europe will now have a supervisory model that is adapted to its needs. You have to remember that half the banks in Europe come from other states," said EU financial services commissioner Michel Barnier.

A European Systemic Risk Board will monitor for the build-up of risks in the EU financial system as a whole, and will issue 'recommendations' whenever it detects a threat such as a housing or stock market bubble.

Its will be headed by the European Central Bank chief for the first five years, after which arrangements will be reviewed.

Implications

Under the final deal, the ESAs will get powers to settle disputes among national financial supervisors if they fail to agree on a cross border issue, such as the Fortis bank collapse in 2008 which saw arguing between the Netherlands and Belgium delay the rescue operations.

They will also be able to impose temporary bans on risky financial products and activities, as well as propose the setting up of new Europe-wide technical standards in the different areas.

If national supervisors fail to act, then the new bodies in theory can also impose decisions directly on financial institutions in extreme cases, although it remains to be seen how this will work.

"The new regulators must be responsible," cautioned centre-left MEP Peter Skinner who championed strong powers for the pensions authority and steered the legislation through parliament.

In general however, MEPs did not win the power for the authorities to directly supervise banks and other financial players, leaving that task to national regulators, although a review after three years could see the ESAs' powers grow.

Parliament's call for all three authorities to be located in Frankfurt close to the European Central Bank was also shelved in the final compromise.

Instead, the European Banking Authority (EBA) will be based in London, and a European Securities and Markets Authority (ESMA) in Paris, with only the European Insurance and Occupational Pensions Authority (EIOPA) set up in Frankfurt.

EU top court backs Canada trade deal in ruling

The European Court of Justice ruled on Tuesday that the EU-Canada free trade agreement, and its controversial dispute settlement mechanism, is in line with the bloc's rules.

EU and Japan in delicate trade talks

The Japanese PM comes to Brussels to discuss the first results of the new EU-Japan free trade deal, plus WTO reform - a sensitive topic before he moves onto Washington to face Donald Trump.

News in Brief

  1. EU flies rainbow flag on anti-homophobia day
  2. EU to freeze money and visas of foreign cyber-attackers
  3. EU reassures US on arms sales
  4. Use euros over dollars in energy contracts, France says
  5. UK cross-party Brexit talks collapse
  6. Climate activists occupy German-Russian gas pipeline
  7. Farage got €515,000 of private perks
  8. French EU commissioner urges Italy not to overspend

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  2. Nordic Council of MinistersEducation gets refugees into work
  3. Counter BalanceSign the petition to help reform the EU’s Bank
  4. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  5. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  6. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  7. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  8. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  9. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  10. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  11. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  12. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic commitment to driving global gender equality
  2. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  3. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  4. Nordic Council of MinistersNordic talks on parental leave at the UN
  5. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  6. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  7. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  8. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  9. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  10. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  11. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  12. Nordic Council of MinistersNordic ministers take the lead in combatting climate change

Join EUobserver

Support quality EU news

Join us