March 2, 2009
The European Commission will present a preliminary assessment and response to the main conclusions of the de Larosière Report on 4 March. A detailed implementation plan should be produced by the end of the year.
The report published on 26 February, calls for tightened financial supervision, makings 31 recommendations and calling for a European System of Supervision and Crisis Management and a new European Systemic Risk Council on macro-prudential risks in the EU.
The expert group decided that supervision of cross-border financial groups should remain a national affair, despite shortfalls revealed by the ongoing crisis. A single European regulator would be likely to be rejected by several Member States.
The report sets out a plan to develop by 2012 existing EU-level bodies into a Banking Authority, an Insurance Authority and a Securities Authority. The new bodies would decide compulsory minimum EU-wide standards, and provide “legally binding mediation between national supervisors”.
The proposals, according to a Financial Times leader, are “ambitious, hard-nosed and politically plausible”. It is to be hoped that the Commission will support the proposals and the Member States give the green light. Urgent action is essential. This needs leadership.Author : Stanley Crossick