EU moves ahead with changes to financial regulation; establishes new risk board

The European Union is moving ahead with the creation of a European Systemic Risk Board, which will monitor and assess potential threats to financial stability, the European Council has decided.
In addition, “where necessary,” the risk board in a financial crisis would “issue risk warnings and recommendations for action,” the EU Council said in its Presidency Conclusions bulletin, posted online.
The European Council further recommended that a European System of Financial Supervisors be established, “aimed at upgrading the quality and consistency of national [financial] supervision, strengthening oversight of cross-border groups through the setting up of supervisory colleges and establishing a single rule book applicable to all financial institutions in the single market,” the European Council said on June 19.
The system would be comprised of three new European Supervisory Authorities (ESAs), which, among many other responsibilities, would have supervisory powers over credit rating agencies.
“The financial crisis has clearly demonstrated the need to improve the regulation and supervision of financial institutions, both in Europe and globally,” the council said.
“Addressing the failures exposed by the present crisis will contribute to preventing future ones. It will also help restore confidence in the financial system, in particular by enhancing the protection of depositors and consumers, and will thus facilitate the recovery of the European economy.”