The Commission has confirmed it will go ahead with its plans to create two new EU bodies:  

  • the European System of Financial Supervisors (ESFS), which will comprise national regulators and the new-look “3L3” committees (European Supervisory Authorities); and  
  • the European Systemic Risk Board (ESRB), which will comprise heads of the ECB, national central banks, the European Supervisory Authorities and national supervisors.

ESRB will be focused on macro-prudential regulation and ESFS on micro-prudential regulation. ESRB will be able to issue recommendations and warnings to national and European supervisors, who must comply with the recommendations or explain why they have not done so. It will work with the FSB and its US equivalent. ESFS will oversee convergence of national rules, working towards a European rulebook, but much of the day-to-day work will be done by the new European Banking Authority (EBA – taking over from CEBS), a European Insurance and Occupational Pensions Authority (EIOPA – taking over from CEIOPS), and a European Securities and Markets Authority (ESMA – taking over from CESR). These authorities will work on new technical standards, co-operation between regulators (although colleges of regulators will still exist), deal with consistent application of rules and where necessary act directly against financial institutions. A new body will also have powers of supervision over CRAs. The EU says, though, that national financial supervision will always be critical and the new authorities will not act unless they have to.