The European Commission has adopted a Communication proposing radical changes to Financial Supervision in Europe. The two key elements of this Communication are: (i) the creation of a new European Systemic Risk Council (ESRC), which should monitor and assess risks to the stability of the financial system as a whole (macro-prudential supervision) and (ii) the European System of Financial Supervisors (ESFS) for the supervision of individual financial institutions (micro-prudential supervision).

The Communication also suggests modifications to the current architecture of financial services committees for supervision of individual financial institutions (micro-financial supervision) at EU level and the creation of a single body in Europe responsible for supervision of systemic risks (macro-financial supervision). Legislation to embody these proposals will follow in the autumn. The Commission invites interested parties to submit comments on the Communication before 15 July 2009.