European Union finance ministers have agreed plans for a new Europe-wide system of financial regulation. The deal paves the way for the establishment of several new watchdogs responsible for supervising the financial system in all EU countries.
According to a UK Treasury spokesman, the government has secured important concessions as part of the deal. These include preventing the EU from deciding on future bailouts that could be paid for by British taxpayers.
Under the plans approved by finance ministers from the 27 EU members, three new supervisory authorities will be created to oversee banks, insurers and investment firms.
A separate body, known as the European Systemic Risk Board, is planned to oversee the wider stability of the European financial system as a whole.
It will be led by European central bankers and national regulators, and is likely to be based in London.
The proposals were drawn up by the European Commission following the financial crisis which occurred in the wake of the collapse of Lehman Brothers more than a year ago. The Commission has said it hopes to see the new pan-European system established in the new year although the plans still need to approval of the European parliament.
The agreement appears to be the result of a compromise between the UK and other member states.
Following the meeting, a senior UK Treasury spokesman said the government had secured an agreement that would not allow the EU to make decisions on financial bailouts which could result in British taxpayers picking up the tab.
He said the government had also ensured the FSA would remain the sole supervisor of individual financial firms in the UK.
Before the meeting, Mr Darling warned against more European regulation of the UK financial services. Writing in The Times, he said giving the EU extra powers in the City would be a recipe for confusion.
We must resist measures, however superficially alluring, that could undermine the effective functioning of our cherished single market, he said.
”National supervisors, such as the FSA, must remain responsible for supervising individual companies. Making companies directly accountable to more than one authority is a recipe for confusion”. (BBC).-