proposals , conclusions and dialogues

Proposals, Conclusions and Dialogues

Piotr Madziar – European Commission

20 November 2009, XI European Banking Supervisors XBRL Workshop - Vienna

Topics

• European Commission proposal for supervisory reform

• Critics • Next steps?

XBRL driving forces

XBRLSimplification Crisis

Stoiberg De Larosiere

G20

EU Council EP

COM

MS

De Larosiere Reform

• Financial crisis driven• Position of national regulators?• Global aspect• Commission absolute priority.

European Parliament

Resolution on Lamfalussy follow-up: future structure of supervision (September 2008)

• Calls upon the L3 Committees to design common reporting standards

• Multi-purpose format such as XBRL• Throughout the EU• Calls upon the Commission to submit adequate legislative

proposals

De Larosiere proposal• Commission’s proposal of 23 September 2009• ESRB and ESFS = ECB + ESAs + national regulators+…• Banking: colaterals, capital, fund transfer reg,…• Insurance: insurance and reinsurance, conglomerates,

institutions, Solvency II, anti money laundering,…• Securities & Markets: transparency, markets in FI, market

abuse, prospectuses, hedge funds, CRA, take-over bids, settlements, financial collateral arrangements, ...

• Technical standards,… XBRL?• Links to international standard setters,… XBRL?

More powers for ESAs• Technical standards but criteria in Community legislation • Flow of information• Supervisory culture and supervisory practices• Last resort option in case of disagreement• Training programmes• Aggregate micro-prudential information from national

supervisors• Set-up a Central European Database. The information will be

available for the relevant authorities in colleges of supervisors and forwarded to the European Systemic Risk Council

• Technical arrangements with international organisations and administrations of third countries.

Proposed structure for Banking

EBA – European Banking AuthorityChairperson

Mgt BoardExecutive Director

ECA - European Court of Auditors

OLAF – l’Office européen de lutte anti-fraude

European Commission

€

Banking Stakeholder Group

Board of Supervisors

Appeal processes

EU Court of First Instance

Member State Member StateNSA NSA NSA

EU Court of Justice

Board of Appeal for 3 ESAs

EU Council - QMV

EBA QMV

ESFS

ESFS - EU System of Financial Supervisors

ESMA - European Securities and Markets Authority

EIOPA - European Insurance and Occupational Pension Authority

EBA - European Banking Authority

Joint Committee of European Supervisory Authorities

College of SupervisorsNSA

NSANSA – National Supervisory Authority

NSANSA

NSA

NSANSA

NSA

NSANSA

NSA

ESRB – EU Systemic Risk Board

ESRB – European Systemic Risk Board

ECB

ESFS – European System of Financial Supervision

Informatio

n exchange

3rd Countries & Int’lInform

ation exc

hange

Informatio

n exchange

Practicalities, Agenda

• Financial assistance 37- 70 M€ in years 2011-2016• 40% from the Community budget• London, Paris, Frankfurt• Status similar to EU Agency• 74-90 staff (2016)• EU Staff Regulation (independence, impartiality).

Financial Market-driven regulatory data reform

Common Reporting Framework

Regulated Financial Markets

Governments

All Markets?

Critics

• Serious problems

Critics

Stop!

R e a l a r g u m e n t sSovereignty

Treasury

Global dimension

Exclusion and Dominance

Sovereignty of MS:

CriticsR e a l a r g u m e n t s

• Host states allowed to take steps if weaknesses are identified - that can be abused for commercial or protectionist reasons

• ESAs empowered to override national regulators

• Changes give EU more powers. Emergency declared by the Commission without involvement of the Council. Unclear emergency procedure.

• MS should decide first what will ESAs do and how

CriticsR e a l a r g u m e n t s

• Not clear how global cohesion is addressed

• Need for allignment with G-20 and Basel.

• It would be very bad for EU and its financial centres If we forge ahead disregarding what US, Switzerland and others are doing

Global cohesion:

Fiscal responsibilities of MS:

CriticsR e a l a r g u m e n t s

• June’s ECOFIN mandate (shoulnd’t impinge on the fiscal responsibility of the MS) breached

• EU financial supervisory structure needs an EU fiscal arrangement

CriticsR e a l a r g u m e n t s

• QMV to recognize the size and importance of financial services relative to GDP

Exclusion and Dominance

• Any compromise would need to assure that host states receive all prudential information about entire group.

• Eurozone dominance in ESRB

• Bankers dominance in ESRB, disregarding the fact that the choice between security and price is a democratic trade-off decision taken by governments, for the citizens.

Options/ScenariosApproach Implications Effects

Yes we can “Political” arrangement despite all the odds

Fast, “big bang” type of approach

Now, with the big stakes and big appointments discussed

Yes but … Prolonged existence of the current L3 non-mandatory coordination

Prolonged existence of CAN DOs and CAN’T DOs

Until next financial crisis

Is the money spent wisely?

Substitutes: colleges? ECB role?

New revised Commission’s proposal?

Contacts

• DG Internal Market & Services website:http://ec.europa.eu/dgs/internal_market/index_en.htm

• Piotr Madziar

+32-(0)2-2950869piotr.madziar@ec.europa.eu