European policymakers launched a public consultation on Tuesday aimed at improving the financial sector’s regulatory framework as part of an effort to further integrate the region’s capital markets.
Specifically, the European Commission announced a review of the operation of the region’s regulators known collectively as the European Supervisory Authorities (ESAs), which include the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority.
“The ESAs are a cornerstone of the reforms put in place in the wake of the financial crisis,” the European Commission says. “Since their establishment, the ESAs have contributed to the building of the single rulebook for financial services [banking, insurance and capital markets] and to the convergence of supervisory practices.”
Now, the European Commission is seeking to identify areas in which the “effectiveness and efficiency” of the ESAs can be strengthened and improved. “More co-ordinated and integrated supervision will be increasingly important in future, notably to develop and integrate EU capital markets,” it says.
In particular, the consultation aims to review the regulators’ operations — including the current governance structure, funding framework and supervisory powers — to assess whether the regulators are adequately protecting the public interest and contributing to the stability and effectiveness of the financial system.
In addition, the consultation is also looking for ways to improve the regulatory framework for the future. “The results should provide a basis for concrete and coherent action by way of a legislative initiative, if required,” the European Commission says.
“The [European Union] needs to step up its efforts to build more integrated, efficient and stable financial markets so that it is equipped to deal with new challenges. Sound and efficient financial supervision is key to this goal,” says Valdis Dombrovskis, vice president responsible for financial stability, financial services and Capital Markets Union, in a statement. “In the six years following the crisis, the ESAs have carried out important work in developing a single rulebook for financial services. I want to hear from all stakeholders about how we can ensure that these authorities have the most impact in supporting greater convergence of supervisory practices.”
The ESAs say in a statement that they welcome the review and “that the time is now ripe” for an assessment of possible areas in which there operations can be improved.
“The European Commission’s consultation raises important issues on the powers of the three authorities, on possible improvements in their decision-making processes and on a much needed review of their financing frameworks,” the ESAs’ statement says.