To speak with one voice

http://ec.europa.eu/internal_market/finances/docs/de_larosiere_report_en.pdf

IV. EQUIPPING EUROPE WITH A CONSISTENT SET OF RULES

99) While the above areas for regulatory repair are relevant for all major jurisdictions in the world, and should be addressed internationally, Europe suffers from an additional problem in comparison to all single jurisdictions: the lack of a consistent set of rules.

100) An efficient Single Market should have a harmonised set of core rules. 101) There are at least four reasons for this:

- a single financial market - which is one of the key-features of the Union - cannot function properly if national rules and regulations are significantly different from one country to the other;

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109) This being said the problem of regulatory inconsistencies must be solved at two different levels:
- the global level. The EU participates in a number of international arrangements (e.g.
Basel committee, FSF) and multilateral institutions (e.g. IMF) that cannot be unilaterally changed by the EU. If and when some changes in those global rules
appeared necessary, Europe should "speak with one voice" as we will mention in the global chapter

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136) The idea of a pooled EU fund, composed of the national deposit guarantee funds, has been discussed by the Group, but has not been supported. The setting-up and management of such a fund would raise numerous political and practical problems.

Furthermore, one fails to see the added-value  that such a fund would have in comparison to national funds operating under well-harmonised rules (notably for coverage levels and the triggering of the scheme).

EU harmonization should not go as far either as laying down rules on the possible use of DGSs in the management of a crisis. It should not prohibit additional roles beyond the base task for a DGS to act ex post, in the crisis resolution phase, as a pay box by reimbursing the guaranteed amount to depositors in a defaulted bank. Most member countries limit their national DGS to this pay box function. Some countries, however, extend the activities by giving their DGS also a rescue function. The Group did not see any need for EU harmonization in this respect.

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I. INTRODUCTION

144) The previous chapter proposed changes to the European regulation of financial services.

This chapter examines the policies and practices of supervision of financial services within the EU and proposes both short and longer term changes. Regulation and supervision are interdependent: competent supervision cannot make good failures in financial regulatory policy; but without competent and well designed supervision good regulatory policies will be ineffective. High standards in both are therefore required.

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164) It remains however the case that the evidence clearly shows that the crisis prevention function of supervisors in the EU has not been performed well, and is not fit for purpose9.

165) This chapter will not enter into the details of recent trends that have resulted in an increasingly integrated European financial market (see annex 3) nor into the description of the present supervisory arrangements (see annex 4).

166) What is proposed here is basically a new structure to make European supervision more effective and so improve financial stability in all the member countries of the EU. There are two elements to this: strengthening the quality of both national supervision and European supervision. The evidence given to the" Group by the level 3 committees was clear that, under their existing mandate as advisory committees to the Commission and with their present working methods, their ability to develop their work further will be severely constrained.

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A) Stage 1 (2009-2010): Preparing for a European System of Financial

Supervision

a) Preparing for the transformation of the level 3 committees into European

Authorities.

194) The Commission, the Council and the Parliament should immediately start the necessary legislative work building a consensus to transform the level 3 committees into three European Authorities: a European Banking Authority, a European Insurance Authority and a European Securities Authority. The actual transformation should be completed at the start of the second phase (see below).

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B) Stage 2 (2011-2012): Establishing the European System of Financial Supervision

a) Role of the new European Authorities

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CHAPTER IV: GLOBAL REPAIR

I. PROMOTING FINANCIAL STABILITY AT THE GLOBAL LEVEL

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VI. EUROPEAN GOVERNANCE AT THE INTERNATIONAL LEVEL

256) While the European Union is one of the key international players, its representation in international organisations and other international bodies is fragmented and lacks coherence and continuity. In some cases, the EU's representation is incomplete (e.g. the FSF or G20 at Ministerial level), while in other cases the EU as a whole – i.e. including its Member States - is even perceived as being over-represented, to the detriment of emerging market economies. This weakens the possibility of the EU speaking with a single voice, and it is something that is also increasingly criticised by the EU's international partners. It is therefore essential to organise a coherent European representation in the new global economic and financial architecture. In the context of a more ambitious institutional (and quota) reform of the IMF, this could imply rearranging constituencies and reducing the number of Executive Board members for the EU to not more than two. A similar consolidation of the EU's representation should be  installed for other multilateral fora.

VII. DEEPENING THE EU'S BILATERAL FINANCIAL RELATIONS

257) The EU has every interest in leading and developing its relations with the major financial powers of the world. Over the past years, good technical work has been carried out with the United States on complex regulatory and supervisory issues and these efforts should be intensified with the new US administration to find the broadest and deepest common ground. Likewise, with Japan and China, Brazil, India, Russia, Saudi Arabia, and other emerging countries the EU should work to develop common understanding on the global financial reforms that are needed. The EU has a unique opportunity to strengthen its global influence and to promulgate its ideas and approaches. But for this to happen – the EU's own supervisory and regulatory model must not just be fit for purpose but a global example of effectiveness, utility, fairness, cooperation, consistency and solidarity.

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See Lords Hansard http://www.publications.parliament.uk/pa/ld200809/ldhansrd/text/90514-wms0001.htm#09051452000077

EU: General Affairs and External Relations Council

Statement