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Report urges EU finance watchdog | Report urges EU finance watchdog |
(about 3 hours later) | |
The City of London and other financial institutions should be supervised by a new pan-European watchdog, a European Commission report recommends. | |
Its proposals, written by ex-Bank of France Governor Jacques de Larosiere, include an EU-wide supervisory scheme for banks and financial bodies. | |
Supporters say the banking system is too big and crosses too many borders for national supervision to function. | Supporters say the banking system is too big and crosses too many borders for national supervision to function. |
But the UK government will wait to see the details before responding. | But the UK government will wait to see the details before responding. |
Mr de Larosiere told a news conference that the 68-page report ran to 66 recommendations. | |
He said that the report proposed that domestic banks should largely continue to be supervised by national supervisors, but in some important cases, involving cross-border institutions, it would not be effective enough. | |
European Commission President Jose Manuel Barroso stressed the need for urgent reform, saying: "In advance of broader proposals on supervision later in the year, the Commission will present detailed concrete proposals during April on private equity, hedge funds and then on remuneration schemes." | |
Tighter regulation | Tighter regulation |
Fans of the proposal think that national watchdogs like Britain's Financial Services Authority no longer make sense Mark Mardell, BBC Europe Editor Mark Mardell's Euroblog | Fans of the proposal think that national watchdogs like Britain's Financial Services Authority no longer make sense Mark Mardell, BBC Europe Editor Mark Mardell's Euroblog |
The independent group was set up by Mr Barroso in November to look at ways of improving supervision of the financial sector. | |
It followed criticism that Europe's response to the credit crunch and the crisis in the financial sector was too nation-based and needed more EU involvement, possibly via the European Central Bank. | It followed criticism that Europe's response to the credit crunch and the crisis in the financial sector was too nation-based and needed more EU involvement, possibly via the European Central Bank. |
The report's call for a pan-European watchdog has attracted the most attention. Its aim would be to give an early warning of the kind of mistakes that led to the financial crisis. | |
BBC Europe Editor Mark Mardell says supporters of the scheme would like to see national bodies such as the UK's Financial Services Authority (FSA) made subordinate to the new institution. | |
Our editor adds that Prime Minister Gordon Brown has relaxed his previous opposition to tighter regulation at a European level, but the government will wait to see the level of supervision recommended before giving its response. | |