At the close of last year, European Union finance ministers gave the green light to a new supervisory architecture for the EU’s financial markets. Yet, by concentrating power at the European level, the new architecture violates the golden rule of any institutional design: decisions should be made by those who bear responsibility and who ultimately must pay.
PRAGUE – At the close of last year, European Union finance ministers gave the green light to a new supervisory architecture for the EU’s financial markets. Now it is up to the European Parliament to address this hypersensitive issue, the most controversial part of which is the powers and responsibilities to be given to the three new pan-European supervisory agencies for banking, securities, and insurance.
The parliament’s decision will be far-reaching, and will affect European finance for many years to come. Although some complain that December’s compromise on financial regulation does not go far enough, there is a case to be made that the opposite is true.
The springboard for this fundamental policy shift was the report issued in early 2009 by former French central banker and IMF chief Jacques de Larosière. But his report ignored many vital issues that were then largely overlooked in the subsequent debate on financial reform.
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PRAGUE – At the close of last year, European Union finance ministers gave the green light to a new supervisory architecture for the EU’s financial markets. Now it is up to the European Parliament to address this hypersensitive issue, the most controversial part of which is the powers and responsibilities to be given to the three new pan-European supervisory agencies for banking, securities, and insurance.
The parliament’s decision will be far-reaching, and will affect European finance for many years to come. Although some complain that December’s compromise on financial regulation does not go far enough, there is a case to be made that the opposite is true.
The springboard for this fundamental policy shift was the report issued in early 2009 by former French central banker and IMF chief Jacques de Larosière. But his report ignored many vital issues that were then largely overlooked in the subsequent debate on financial reform.
We hope you're enjoying Project Syndicate.
To continue reading, subscribe now.
Subscribe
Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.
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