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Gordon Brown Signs Up To Creation of New EU Financial Regulators
Bruno Waterfield in Brussels
June 19, 2009
The European Commission and other EU officials are celebrating after the Prime Minister accepted on Thursday night the creation of European supervisors over national regulators.
Senior EU officials described how in return for a promise that Brussels regulators can not have power to tell the British government when, and by how much, to bail out banks, Mr Brown has given ground on a broad range of other supervisory powers.
"One year ago, if you had asked if was it possible to go so far as to have the Prime Minister of Britain accepting not only common principles but common systems of auditing and binding decisions at the EU level, then I think that no one would have believed it," said a senior official.
Meeting in Brussels, EU leaders are agreed on the need for better oversight of banks and financial institutions to prevent a repeat of last year's crisis, which has tipped the global and European economy into its worst downturn for 70 years.
The proposals involve creating three pan-European watchdogs next year to ensure countries introduce new rules on supervision. Under the proposals, there is to be a European Banking Authority in London, an Insurance Authority in Frankfurt, and a Securities Authority in Paris. All European leaders agreed today to their creation.
The new bodies will have the authority to ensure European Union market laws are implemented similarly in every country.
There is also to be the establishment of a new European Systemic Risk Board that would monitor the build-up of risks to stability in the region.
According a draft EU summit communiqué, Mr Brown has also lost a battle to keep control of a powerful "Systemic Risk Board" (ESRB) out of the hands of the European Central Bank.
The ESRB will monitor potential threats to financial stability and, where necessary, issue risk warnings and recommendations for action and supervise their implementation. Britain had fought hard to ensure chairmanship of the new body was rotated among all EU countries but appears to have conceded control to eurozone countries.
"The members of the general council of the European Central Bank will elect the chair of the ESRB," the draft communique states.