We have reported previously on the proposed overhaul of the European Financial Regulatory System (click here to see our previous post). On 17 November 2010, the Council of the European Union formally adopted the legal texts to establish the European Systemic Risk Board (ESRB) and three European Supervisory Authorities (ESAs): a European Banking Authority (EBA), a European Insurance and Occupations Pensions Authority (EIOPA) and a European Securities and Markets Authority (ESMA).

The role of the ESRB will be to monitor and assess potential threats to the stability of the financial system and, where necessary, to issue risk warnings and recommendations for action. Addressees will be required to provide adequate justification for any failure to act on the ESRB's recommendations.

The three ESAs will replace the existing committees of supervisors. Their role will be to ensure that the supervisory authorities of each member state apply a set of harmonised rules and consistent supervisory practices.

See our previous post for further details on the role of EIOPA.

The Council's press release can be found by clicking here.