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MEPs back root-and-branch reform of financial supervision
With an overwhelming majority, the European Parliament on Wednesday sent a strong message to EU Member States that the only option for effective financial supervision is one based on a thorough reform of the current system, with the establishment of European authorities capable of taking effective action to avert crises and avoid taxpayer bailouts.
By adopting amendments to the legislation but deferring the final vote on the legislative resolution, the EP has given its negotiators the backing of the full Parliament and has also left the door open for a few more weeks for an agreement to be reached at first reading with the Council after the summer break. In a separate declaration, Parliament's main political groups clearly indicated that the ball is now firmly in the Council's court to come forward with a position acceptable to all sides.
Ready to negotiate ... for a good deal
This gesture is a final endeavour on the part of the EP rapporteurs to help the new Belgian Presidency to move the Member States to a more satisfactory position, the declaration adds.
Effective supervisory authorities …
The ESAs would be able to issue decisions directly to a financial institution such as a bank, where the national supervisor has not been able to change some of its practices that are considered unsound. They would also have the power to settle disputes between national supervisors and to supervise important cross-border financial institutions by acting through the national supervisors.
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European Systemic Risk Board (ESRB): explaining risk faster and better
MEPs also want to make risk levels more easily identifiable. They say the ESRB should develop a common set of indicators to permit uniform ratings of the riskiness of specific cross-border financial institutions and make it easier to identify the types of risks embedded in them.
To enhance the ESRB's visibility and credibility, MEPs say it must be chaired by the ECB President. Parliament also voted to widen the ESRB board membership to include academics.
Next steps