EU macro-prudential oversight

Professor G A Walker, Centre for Commercial Law Studies, London

A series of parallel initiatives have been taken forward within the EU concerning the construction of a new parallel macro-prudential systemic and micro-prudential regulatory infrastructure. This involves the establishment of a European Systemic Risk Board (ESRB) to conduct macro-prudential oversight with a separate European System of Financial Supervisors (ESFS) to manage micro-prudential supervision at the EU level. The ESFS would be made up of three new committees comprising the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA). These would replace the earlier financial committees in place within the EU[1]. The objective would be to reinforce financial stability, ensure that the same technical rules were enforced consistently across the EU, identify risks within the system at an early stage and allow necessary action to be taken in emergency and crisis situations as well as to resolve disagreements between national authorities.