The date of 1st January 2011 marks a turning point for the European financial sector
Today, three new European Authorities for the supervision of financial activities – for banks, markets and insurances and pensions respectively - start their work a few days after the launch of the European Systemic Risk Board.
The crisis highlighted only too clearly the limits and sometimes the failings of our supervision system in Europe. The accumulation of excessive risk was not detected. Surveillance and supervision were not effective in time. When transnational financial institutions faced problems, the coordination between national authorities was far from optimal, and this even though these institutions are more and more numerous.
Europe is learning the lessons from the crisis and that is why today, it is giving itself a new apparatus of surveillance and supervision. To detect problems early and to act in time – in a coordinated and efficient way. This new structure are the control tower and the radar screens that the financial sector needs,
The European Systemic Risk Board will monitor the entire financial sector, to identify potential problems which could contribute to a crisis in the future.
It will work in close cooperation with the new European Supervisory Authorities. These will not replace national authorities and our objective is not to transfer the control of financial institutions to the EU. Our aim is to create a network of authorities, where the national authorities are responsible for the daily surveillance, and the European authorities – using the expertise of the national authorities and working hand in hand with them – are responsible for coordination, monitoring and if need be arbitration between national authorities, and will contribute to the harmonisation of technical rules applicable to financial institutions.
With this new framework of financial supervision in Europe in place, we are putting into effect in practical terms the lessons learnt from the crisis. This framework is at the heart of the ongoing financial reforms. It is the foundation on which all other reforms are based – for example those for credit rating agencies, hedge funds, derivatives, stress tests etc. Together, these measures will enhance consumer protection. And they will contribute to ensuring the taxpayer is not again the first in line to bear the costs of a crisis.
This move forward also demonstrates that Europe is leading the way and upholding its international committments. Thes new authorities will work with others accross the world to ensure better global supervision.
I wish these new authoturies a successful future and the European Commission commits itself to help them achieve their objectives.