EUROFI is holding its 2008 annual conference on the eve of a Eurogroup and Ecofin Council taking place in Nice under the French EU presidency, at a time when strong measures are still needed to restore confidence in the global financial system.
A year after the subprime crisis burst, EUROFI has put forward seven key recommendations to further integrate the supervision of cross-border financial groups at a European level :- European supervisors should implement prudential legislations that are harmonized, ie transposed on a consistent basis by the 27 Member States.
- The group supervisor must have an overview of the financial group’s solvency and liquidity. In this respect, it is responsible for setting suitable prudential requirements for the group and each of its European operations.
- The group supervisor must systematically ensure timely access to information required for the other national supervisors, especially when the group’s local activity is significant for the financial markets placed under their responsibility. To that purpose the group supervisor sets a college gathering the other national supervisors.
- The supervisors of a group must have a common mandate. This mandate must be set out to achieve identical protection of all of the group’s customers in Europe.
- Host supervisors must be allowed to adapt their own control and oversight mechanisms in view of the specific features of each cross-border group in order to allow the group supervisors to include them in a coherent and optimized approach for supervising the group.
- In the event of any disagreement in the assessment of risks or any potential competitive imbalance, the host supervisors must have neutral, effective and rapid means of appealing against a group supervisor’s decision. In this respect, CEIOPS or CEBS must be allowed to issue opinions in order to solve such problems. If the group supervisor decides not to apply them, it should give a formal explanation of its refusal.
- The consequences of the prudential measures adopted by the various colleges in terms of competition and financial stability, the efficiency of the control and supervision practices deployed by the colleges, and lastly, the level of consensus achieved within the colleges must be reviewed on a regular basis by CEBS and CEIOPS, which must report on their findings to the Union’s Institutions.
EUROFI 2008 annual conference will represent a unique opportunity for European politicians, central bankers, supervisors and industry representatives to discuss these proposals to further strengthen European financial supervision.
As the financial crisis deepens, EUROFI strongly believe that new steps forward are urgently needed to reinforce the European financial integration and reinforce the supervision of croos-border financial groups in the European framework.
