The European Commission came forward with more legislation on financial regulation on Monday (26 October), as the EU continues its drive towards ensuring that last year's financial meltdown is not repeated.
The draft directive is designed to amend already existing sectoral European legislation, thereby making it compatible with last month's commission proposals to set up a European System of Financial Supervisors (ESFS).
If agreed by the member states and the European Parliament, the ESFS will consist of three authorities in the areas of banking, insurance and occupation pensions, and securities and markets.
Monday's proposal lays down further detail on the scope and powers of the three authorities, including the thorny issue of the authorities' mandate to settle disagreements between national supervisors.
"This proposal complements and reinforces our supervision package of 23 September and provides more detail about precisely what powers are proposed for the new European supervisory authorities," internal market commissioner Charlie McCreevy said in a statement.
"I urge the Council and the parliament to adopt the whole supervision package in good time to allow the new authorities to come into being at the end of 2010, if not before," he added.
However, the head of the European Parliament's economy committee, Liberal MEP Sharon Bowles recently indicated that her committee had no intention on being rushed to approve the legislation.
Instead, she said the committee would carefully assess the "cumulative effect" of the commission proposals.
For their part, the parliament's Socialists have warned that the three authorities must have sufficient powers to carry out their job.
"We want a serious monitoring operation at European level that keeps the financial markets under close scrutiny and not just an empty piece of window-dressing," said party leader Martin Schulz.
"The three new bodies to supervise the financial sector should be more than a mere club of regulators. They should have real power", he added.
Ultimately the Socialists would like to see a single regulator for the EU's financial sector, something European Commission President Jose Manuel Barroso has said is currently politically impossible.
A recent meeting of EU finance ministers reached broad agreement on another proposal in last month's legislative package from the European Commission, the setting up of a European Systemic Risk Board which is designed to monitor risk in the EU financial sector as a whole.
However, the UK prevented a definitive agreement on the risk board, seeking instead to maintain the option of re-opening the discussions in an apparent bid to increase its leverage in talks on the three supervisory authorities, due to take place later this year.
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