Europe-wide supervision of banks and financial bodies could be on the cards under proposals today to provide an “early warning system” against future economic meltdowns.
An eight-strong group of “wise men” set up by the European Commission last November is unveiling recommendations for better monitoring and cross-border financial coordination in the EU.
But the answer could mean diluting national financial authority as EU leaders seek the long-term security of pan-European alert systems and oversight.
Today’s report by former Bank of France governor Jacques de Larosiere is likely to urge regulation across all financial sectors and a central watchdog to ensure coordination and a swifter joint response if economic disaster looms again.
But the key is developing a means of spotting impending downturns sooner and having in place an EU-wide game plan to tackle failures in the banking and finance sector.
EU leaders agreed last October on the need for tighter regulation and supervision, including an “early warning system”. The call was repeated at another summit last weekend.
But the response to today’s proposals from the “wise men” will depend on how far member states are prepared to go in handing overall supervision to a central body which may be seen as undermining the role of the City of London and other national financial bodies.
Before the report was unveiled, it came in for attack from transparency campaigners claiming Mr de Larosiere and his committee of seven other “wise men” were hardly in a position to advise others in financial regulation and supervision.
A report published by Corporate Europe Observatory, SpinWatch, LobbyControl and Friends of the Earth Europe claims the group includes “financial industry insiders implicated in the current crisis”.
The report, called Would You Bank on Them?, says four of the eight have close links to banks caught up in the crisis – Lehman Brothers, Goldman Sachs, BNP Paribas and CitiGroup.
A fifth, Callum McCarthy, was the head of the UK Financial Services Authority, the report points out.
One of its authors, Andy Rowell from SpinWatch said: “The Commission must aim for an open and transparent process that ensures that policy recommendations are in the interests of all Europeans, not just the financial industry.”
Paul de Clerck, of Friends of the Earth Europe, said: “The Commission should not rely on a group with such close ties to the financial industry.”