THE EUROPEAN PARLIAMENT has this morning voted to vote in favour of introducing a new pan-European banking supervisor and regulator for the European Union .
The new accord sets up four new financial watchdogs with jurisdiction over the continent’s banking, markets, securities and insurance sectors.
The goal of the new system is to establish a closer co-operation and a broader degree of co-ordination between the regulatory frameworks already in place within member states, and also to slowly harmonise the legal landscapes of the 27-member bloc’s banking systems.
The European Banking Authority, by far the most significant of three new bodies to be set up, will be based in London and feature representatives from the heads of European central banks on its board.
The European Systemic Risk Board, meanwhile, will involve the heads of all of Europe’s central banks, including Ireland’s Patrick Honohan, and will be chaired by ECB president Jean-Claude Trichet.
It will deal with scrutinising large banks operating across member states, and will step in to adjudicate on the liabilities of individual member states should an institution operating across the EU’s internal borders fail.
If it had been introduced two years ago, for example, it would likely have ruled that Ireland was responsible for guaranteeing the deposits held in Ulster Bank, despite its being owned by Britain’s Royal Bank of Scotland.
The measures – which took a year to negotiate – form the biggest international regulatory package ever. The new bodies will come into existence on January 1.
Satisfaction over the approval will likely be tempered somewhat, however, by the disappointment of European Commission president José Manuel Barroso over MEPs’ refusal to endorse a new scheme allowing the EU to fund its operations by issuing bonds.
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