Cause and Effect in European Politics and Law

US and EU want centralisation of banking supervision

Adelina Marini, May 28, 2009

The EU and the US are going to obvious centralisation of bank supervision after it was reported that Washington is considering the creation of a one and only agency that would regulate the banking industry and will replace the net of agencies that have failed to prevent the worst financial crisis so far, the "Washington post" reported today. The Agency would be a key element in the administration's sweeping overhaul of financial regulation, which officials hope to unveil in coming weeks, including the creation of a new authority to police risks to the financial system as well as a new agency to protect consumers, the report said, quoting familiar with the issue people.

Yesterday the European Commission proposed a similar plan, the details of which you could see on the links below. But according to today's "Financial times" many member states, particularly the UK, would not accept that easy the introduction of non-national bodies. A spokesman of the government in London, quoted by the newspaper said that “Any reforms we make within the EU need to be workable, practical and consistent with the approach we are taking internationally through the G20". Actually a great part of the agreements in April at the G20 summit were based upon the ideas of British prime minister Gordon Brown who has served as a financial minister in the 2 and a half terms of Tony Blair.

Beside the British government and some structures in the City of London, fears of the new plan of the Commission had expressed the ECB because this would have created a legal entity outside the ECB that would have muddled responsibilities for financial stability. But earlier this week the president of ECB Jean-Claude Trichet met with commissioners and, according to the FT an agreement was reached.