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Driving European Recovery European System of Financial Supervisors

Driving European Recovery European System of Financial Supervisors. Shortcomings of the present system. Lack of adequate macro-prudential supervision; Lack of early warning mechanisms; No means for supervisors to take common decisions; Lack of frankness and cooperation between supervisors;

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Driving European Recovery European System of Financial Supervisors

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  1. Driving European Recovery European System of Financial Supervisors

  2. Shortcomings of the present system • Lack of adequate macro-prudential supervision; • Lack of early warning mechanisms; • No means for supervisors to take common decisions; • Lack of frankness and cooperation between supervisors; • Failures to challenge supervisory practices on a cross-border basis; • Lack of consistent supervisory rules, powers and sanctions across Member States; • Lack of resources in the Level 3 committees.

  3. The new architecture European Systemic Risk Board (ESRB) Governors of NCBs + ECB President and Vice-President Chairs of EBA, EIOPA & ESMA European Commission Non-voting: One representative of the competent national supervisor(s) per Member State + EFC President + + + Information on micro-prudential developments Recommendations and/or early risk warnings European System of Financial Supervisors (ESFS) European Banking Authority (EBA) European Insurance and Occupational Pensions Authority (EIOPA) European Securities and Markets Authority (ESMA) National Banking Supervisiors National Insurance and Pension Supervisors National Securities Supervisors

  4. Objective of the ESRB • Develop a European macro-prudential perspective; • Enhance the effectiveness of early warning mechanisms; • Improving the interaction between micro-and macro-prudential analysis; • Allow for risk assessments to be translated into action by the relevant authorities.

  5. The ESRB at work

  6. ESFS: three independent Authorities working together in a network of supervisors NSA

  7. The ESAs at work

  8. Main tasks and powers • Development of technical standards; • Ensure consistent application of EU law; • Resolving disagreements; • Action in emergency situations. With: • Colleges of supervisors remaining lynchpin; • Individual firm supervision remaining at the national level.

  9. Technical Standards

  10. Consistent application of Community Law If no compliance, where directly applicable law applies, Authority can address a decision to an individual firm

  11. Settlement of Disagreements If decision not applied: ESA may adopt decision addressed to a financial institution

  12. Emergency situations Coordinated action needed to remedy serious risks for EU financial stability

  13. Safeguard clause Authorities must ensure that no decision impinges on the fiscal responsibilies of Member States Note: fast-track procedure foreseen for emergency situations

  14. Relation with ESRB Supervisory Authorities act or explain why they have not acted ESRB to provide: analysis, warnings and recommendations ESFS to provide: information on firms and markets

  15. Benefits of the proposed system • Fully connected macro-micro supervisory framework; • Strong cooperation and enhanced trust; • Reinforce colleges of supervisors; • Move towards harmonised rules and powers; • Reinforcement of supervisory resources; • New procedures for supervisors to take common decisions; • Comprehensive means to challenge cross-border decisions; • Quick mechanism allowing for collaborative decisions in emergency situations.

  16. Thank you for your attention

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