De Larosière report backs calls for a European regulator

A report presented to the European Commission outlines a blueprint for European financial regulation

BRUSSELS - The long-awaited report from Jacques de Larosière's chairman of the high-level group charged with delivering recommendation on the future of European financial regulation has finally been published. It contains the expected recommendation to invest the European Central Bank (ECB) with new powers to co-ordinate regulation of the European banking community.

Although the report falls short of proposing a single European regulator, which the group maintains would not garner sufficient political support, it recommended the creation of a new body - a European Systemic Risk Council - under the auspices of the ECB to develop policy and provide warnings relating to systemic risk and financial stability to EU supervisors. The report also proposes establishing another body - the European System of Financial Supervisors - to co-ordinate the decentralised network of supervisors monitoring individual institutions and markets, leaving day-to-day supervision to member states.

The De Larosière report envisages that these new authorities could be created from three existing committees: the European Banking Authority, the European Insurance Authority and the European Securities Authority, which already attempt to co-ordinate national regulators. However, the report calls for this new body to be given extra powers such as imposing legally binding mediation and the ability to supervise specific large cross-border EU financial institutions.