Reforming the EU Financial Market: New Legal Frameworks

During the financial and economic crisis, the weaknesses have been exposed of the legal framework for the EU financial market. One of the major concerns that were addressed at the height of the crisis was the need to ensure the public that their bank deposits are safe and secure. Another was the lack of proper regulation of the financial compensation systems, such as the payment of exorbitant bonuses to bank executives. In response to such concerns a number of legal measures have recently been adopted by the EU… and further measures are pending. Some of these measures amend pre-existing regimes, in particular on deposit guarantee schemes and capital requirements, and other introduce entirely new regimes which, most importantly, seek to ensure that so called shadow banks operate in a transparent manner and that credit rating agencies are competent and avoid conflict of interests.

 

But the financial crisis also exposed a number of inadequacies in the pre-existing EU-system for financial supervision, which was built on three advisory committees: the Committee of European Banking Supervisors (CEBS), the Committee of European Insurance and Occupational Pensions (CEIOPS), and the Committee of European Securities Regulators (CESR). These advisory committees have now been replaced by a set of supervisory agencies with a legal capacity of there own: the European Systemic Risk Board (ESRB), which will monitor for the build-up of risks in the EU financial market as a whole, and three European Supervisory Authorities (ESAs) which cover the banking, the insurance, and the securities sectors. The new agencies took up office on 1 January 2011. In addition to the new architecture established by means of EU legislation, the Lisbon Treaty has brought about several changes in the EU system for adoption of legislation and regulation that will have consequences for the future operation and functioning of the EU financial market. The exact meaning of those changes is far from clear.