The European Parliament today gave the final seal of approval to a package of reforms that will cause a fundamental shift in the way banks, stock markets and insurance companies are supervised as of 2011.
Three European Supervisory Authorities (ESAs) will be established to replace the current supervisory committees. Their powers will stretch much further than the advisory nature of the current system and their potential to gain further competences will be considerable under a strong review clause.
A European Systemic Risk Board (ESRB) will also be established with the task of monitoring and warning about the general build-up of risk in the European Union (EU) economy.
This new system should be able to provide better protection from events such as the Fortis Bank crisis, Germany's unilateral naked short-selling ban and the losses faced by life insurance policyholders in the U.K., Ireland and Germany with the collapse of Equitable Life.
It should, at the same. time strengthen the EU single market for financial services and provide much better investor protection.