The proposals for the European Supervisory Authorities (ESAs): the right (legal) way forward?
H. van Meerten and A.T. Ottow*
1. Introduction1
‘Ongoing financial integration is not compatible with financial stability policies at the national level. So, if we wish to remain on track for further integration, financial stability should be managed at the European level. That is the price to pay for a successful Internal Market for financial services.’2
Apart from the fact that we would not consider this as a ‘price to pay’, we fully agree that the supervision within the EU on financial
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institutions needs to change. Currently, financial stability isnot sufficiently managed at a European level.3
Strictly speaking, a discussion about restructuring financial supervision should start with a vision on the causes of the crises. In 2008/2009 the financial markets collapsed. What went wrong? First and foremost, a financial crisis is almost never the result of a single cause. It is a combination of many factors that come together at the same time and culminate into a major distortion. We will leave the further analyses to economists.4 However, what certainly did not help to mitigate the effects of the crises is the (lack of a harmonized) European supervisory legal framework.
This article deals with the proposals that have been presented by the European Commission in September 2009. These proposals aim to improve the supervision of (multi-jurisdictional) financial undertakings in the EU.
This matter has been debated long before the credit crunch.5 It can be recalled that early proposals of the Treaty of Maastricht advocated the allocation of supervisory functions to the European Central Bank, thereby departing the principles of home country and mutual recognition. These principles were already embedded in the Second Banking Directive.6 Twenty years later, the credit crunch made the national and European legislators seem to realize that now it is time to really alter the system.
This article first shortly addresses some elements of the current state of affairs regarding financial services and supervision. What are the main EU-legal characteristics of the supervisory framework? What are its shortcomings (chapter 2)? Subsequently, we very briefly discuss the proposals that the European Commission and European Council have presented to further harmonize the financial supervision between the Member States (chapter 3).
The fourth chapter will be the main chapter of this article. The originality of this contribution will be to examine to what extent the proposed European system of supervision actually fits into the current EU Treaty legal framework and into its successor, the Treaty of Lisbon. We will focus on two legal issues: 1) can the proposed legal basis for the ESAs (article 95 of the EC Treaty, hereafter: EC)7 be justified and 2) can the ESAs be entrusted with the envisaged powers? The fifth chapter concludes and contains some recommendations.
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