EN Official Journal of the European Union CE 84/874

(2004/C 84 E/0967)

WRITTEN QUESTION E-0759/04

by José García-Margallo y Marfil (PPE-DE) to the Commission

(11 March 2004)

Subject: General framework for ensuring European financial market stability

In view of the fact that financial integration will result in financial institutions becoming increasingly involved in crossborder transactions which may significantly increase systemic risks and crossborder financial contagion, is the Commission considering giving the national central banks and the European Central Bank a greater role in this context, entailing more than just the existing cooperation and exchange of information?

Answer given by Mr Prodi on behalf of the Commission

(23 April 2004)

The integration of the EU financial sector poses new challenges with respect to financial stability, as cross-border and cross-sector linkages intensify contagion risk. In consequence, the process of financial integration requires closer co-ordination between the competent national authorities that are responsible for the regulation, supervision and crisis management of financial institutions, backed up by appropriate regulatory and institutional arrangements at the EU level.

While there is a substantial EU framework of prudential legislation for the financial sector, supervision and crisis management are mainly national competences. The involvement of national central banks in supervision varies from Member State to Member State. Regardless of the chosen national structure, however, the Commission shares the view of the Honourable Member that all efforts should be made to ensure that all the relevant authorities interact efficiently at the EU level.

The two Economic and Financial Committee (EFC) reports on financial stability (April 2000) and crisis management (April 2001) — the so-called Brouwer reports — assessed whether the existing regulatory and supervisory structures in the EU could safeguard financial stability and specifically addressed issues of cross-border and cross-sector co-ordination among national supervisors and central banks within the EU. These reports concluded that the existing institutional arrangements for co-operation are appropriate, but that their functioning should be enhanced. Implementation of the recommendations in these reports is kept under regular review by the Ecofin Council and considerable progress has been made.

A Memorandum of Understanding on co-operation in crisis situations was signed between banking supervisors and central banks, including the European Central Bank, in all of the Member States in 2003. In addition, the Commission has proposed an extension of the Lamfalussy approach to all financial sectors. This will provide the appropriate forums for strengthening the co-operation among national supervisors at EU-level — including central banks where appropriate. The new committee structure also aims at facilitating regulatory convergence among Member States in their implementation of EU financial regulation. The Financial Conglomerate Directive, which will be implemented in Member States in August 2004, will also improve the efficient supervision of cross-border groups by introducing a co-ordinating supervisor.