European financial system governance

Much has been achieved in upgrading and integrating the ‘governance’ of the European financial system in recent years. In parallel with the successful adoption of the Financial Services Action Plan (FSAP), the EU managed to reform its regulatory structure, extending what was proposed by the Lamfalussy Committee for securities markets in early 2001 to banking and insurance. The EU thus created permanent committees of securities, banking and insurance supervisors (the ‘Level 3 Committees’ – CESR, CEBS and CEIOPS). This rapid reform demonstrated that national authorities were capable of overcoming domestic biases, adapting the supervisory structure, and instituting a much greater degree of supervisory cooperation than had existed previously.