The European Commission has published a communication on the de Larosière Group report for the Spring European Council meeting. Key points in the communication include:
- The Commission welcomes the report and shares the Group's analysis of the causes of the financial crisis. The report’s 31 recommendations offer a comprehensive set of concrete solutions for regulatory, supervisory and global repair action.
- The report's recommendation on the need to develop a harmonised core set of standards to be applied throughout the EU is of particular interest to the Commission. Key differences in national legislation stemming from exceptions, derogations, additions made at national level or ambiguities in current Directives should be identified and removed.
- The report highlights the existing gaps in preventing, managing and resolving crises and the difficulties caused by a lack of cooperation, coordination, consistency and trust between the national supervisors. For businesses, complying with numerous different regimes brings additional administrative and regulatory burdens. The Commission agrees with the report's finding that recent experience has exposed important failures in the way supervisors look at specific cases and in their approach to the financial system.
- On macro-prudential supervision, the Commission welcomes the report's idea for a new European body, under the auspices of the European Central Bank (ECB) and involving the Commission and the Level 3 Committees, as such a body would be well placed to identify systemic risks at European level and issue risk warnings.
- In terms of supervising individual companies, the report recommended the establishment of the European System of Financial Supervisors (ESFS). The Commission agrees with the report's finding that the structure of the existing Level 3 Committees is not sufficient to ensure financial stability in the EU and its Member States, and that the inefficiencies in the present structure need to be resolved as swiftly as possible. The Commission also considers that there are merits in a system which combines certain centralised responsibilities at European level while maintaining a clear role for national supervisors who are closest to the day-to-day operation of companies. However, the Commission sees an urgent need to speed up the process of implementation by combining the two phrases proposed by the Group.
Building on the report’s recommendations, the Commission will present a European financial supervision package before the end of May 2009, for decision at the June European Council. The legislative changes to give effect to these proposals will follow in the autumn and should be adopted in time for the renewed supervisory arrangements to be up and running by the end of 2010. The package will include measures to establish a European body to oversee the stability of the financial system as a whole and proposals on the architecture of a European financial supervision system. It is also crucial to strengthen the EU's crisis management and intervention mechanisms. The Commission will publish a White Paper on early intervention by June 2009.
View Communication for the Spring European Council - Driving European recovery, 4 March 2009