Since they were created in 2011, the three European supervisory authorities (ESMA, EIOPA and the EBA) have contributed substantially to the stability and the efficiency of the European financial system. There has been considerable progress on both supervisory convergence and the EU's common financial regulatory framework, known as the "single rulebook". However, both still need continued and targeted efforts to make further progress. To get an overview of what has been achieved so far, and what still needs to be done, the European Commission launched a targeted consultation on 12 March 2021. The consultation will run until 21 May.

Capital markets union

The capital markets union is the EU’s plan to create a truly single market for capital across the European Union. The goal is to get investment flowing to the companies and projects that need them, across all Member States and regardless of where they are located. In this way, it will provide new sources of funding for businesses, give Europeans more options for saving, and ultimately make the EU economy more resilient. But in order to have a well-functioning capital markets union, gradual progress towards more integrated supervision will be indispensable. This is particularly important post-Brexit, with multiple financial centres across the EU. Experience has shown that supervisors following national mandates do not always sufficiently prioritise the oversight of cross-border activities. And the recent Wirecard case, which the Commission has followed closely, also highlights the importance of addressing weaknesses, at a time when European financial markets are evolving very rapidly. 

The Commission plans to start by working towards an enhanced single rulebook, which should help better align supervisory practices and, step by step, underpin progress towards more European supervision. It will also look at ways to make sure that national authorities and ESMA work together to ensure that the European dimension is taken into account in national supervision. The plan is to take stock of what has been achieved in terms of supervisory convergence before the end of 2021. Looking further ahead, any possible legislative measures would be subject to a thorough impact assessment, which would in particular take into account potential reporting requirements or compliance costs for companies.

Seeking feedback

The targeted consultation is part of this exercise in evaluating progress so far. The Commission is seeking views on certain aspects related to the 2019 ESAs review, which introduced a number of changes in the ESAs’ founding regulations – specifically, amendments of existing tools (e.g. peer reviews), new tasks (e.g. establishing common EU strategic supervisory priorities) and governance changes. The consultation also aims to contribute to the wider debate on supervisory convergence and the single rulebook. In addition to this, the Commission organised a conference on 20 April, which allowed it to start a public discussion on these topics and gather the views and opinions of stakeholders.   

This focus on stocktaking provides an opportunity to take a more holistic look at both supervision and the single rulebook, and the interplay between them. It should serve to create a picture of the progress that has been made, and the gaps that remain, which could form the basis for sound proposals, built on broad stakeholder support.  

Read more about the European system of financial supervision

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