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A new European Systemic Risk Council (ESRC) and European System of Financial Supervisors (ESFS) is only part of the Communication the European Commission approved today for the establishment of new Financial supervision in Europe. The Communication is actually a set of ambitious reforms to the current architecture of financial services committees. By the 15th of June all interested parties should submit their comment on the proposal of the Commission.

The Communication is based on the results in the Larosiere group report. The report was presented in February this year and makes a thorough analysis of the reasons for the financial crisis and gives pieces of advice for possible exits. One of the recommendations is indeed tougher supervision on all types of financial institutions and instruments.

Beside the ESRC which will monitor and assess risks to the stability of the financial system as a whole ("macro-prudential supervision"), a European System of Financial Supervisors (ESFS) will be established for the supervision of individual financial institutions ("micro-prudential supervision"). It aims to foster harmonised rules and coherent supervisory practice and enforcement.

A full review of the impact of the Communication will be made in 3 years but not later than 2013.

At the moment there three financial services committees for micro-financial supervision (supervision of individual financial institutions) at EU level, with advisory powers only: the Committee of European Banking Supervisors (CEBS), Committee of European Insurance and Occupational Pensions Committee (CEIOPS) and the Committee of European Securities Regulators (CESR).