Financial Regulation: What is the best solution for the EU?
Tim Ambler, Senior Fellow at London Business School today releases new research in response to the EU consultation papers Communication from the Commission, European financial supervision and the accompanying Impact Assessment, one of their four responses to the financial crisis.
Ambler's co-authored response to the Commission's consultation, sets out a range of recommendations on how financial regulation within the EU should be reformed post crisis. The paper proposes a revised superstructure for financial services as two new linked entities to provide:
- ‘Macro-prudential supervision', i.e. helping to ensure overall and/or by country financial stability
- ‘Micro-prudential supervision', i.e. supervision largely left with member states under EU direction, and/or rule-setting/regulation set by the ESFS or one of its three subsidiary bodies.
Commenting on the findings Tim Ambler said, "The crisis exposed that the arrangements for financial supervision in the EU can create risks to stability through the mismatch between the level of European integration of EU financial markets and the national organisation of supervisory responsibilities."
Concluding, Mr. Ambler reiterated a key message that the seriousness of this problem is magnified given the other weaknesses exposed by the crisis.
The study was carried out by Keith Boyfield from Adam Smith Institute and Tim Ambler from London Business School.
Full study attached.
This paper has emerged from debate within the Adam Smith Institute's Regulatory Evaluation Group. However, the paper itself represents the views of its authors only, and not necessarily the views of other members of the group.