EU financial watchdog can name and shame, but must not intervene
Posted, March 04, 2009 @ 14:00
Brussels, 4th March 2009 --EU-wide cooperation in setting financial regulation must recognise the UK's ultimate need to remain competitive in a global marketplace once the worst of the current crisis is over, John Purvis MEP, Conservative vice-chairman of the European Parliament's Economic and Monetary Affairs committee, said today.
The European Commission is publishing its response to the De Larosiere report on financial supervision, which recommended a new 'European Systemic Risk Council' (ESRC) to be chaired by the European Central Bank (ECB), and a 'European System of Financial Supervisors' (ESFS) to coordinate the EU's national watchdogs. The commission is expected to broadly endorse the proposals.
But UK Chancellor Alistair Darling has today told his fellow finance ministers that the watchdog should not have strong powers to intrude into national regulation. He also argued that a pan-EU supervisory body should not fall under the auspices of the ECB, but should remain independent.
Mr Purvis said:
"We should encourage national regulators to cooperate and an early warning system may help prevent another major collapse of the banking system. However national regulators must not be dictated to by a supranational body.
"We should ensure we do not muddy the waters of jurisdiction by giving the European Central Bank powers to intervene in the economies of non-Eurozone countries. It should work with the central banks of other non-eurozone countries to coordinate surveillance of the financial health of the EU as a whole.
"The response to the financial crisis needs to be measured rather than over-radical. We must ensure that we create a framework that protects our industry as far as possible from future crises without damaging our competitiveness. A hair's breadth in the wrong direction will be the difference between overregulation that stifles our recovery and sound regulation that ensures it."