In all the European Union countries, Regulation and Supervision is undergoing major changes, and integrated supervision is a hallmark of the new reform. At the European Union level, reforms have led to the setting up of the European Systemic Risk Board and three European Authorities (European Banking Authority, European Securities and Markets Authorities, European Insurance and Occupational Pensions Authority). They work together in scrutinizing risks and formulating policies for dealing with systemic threats. The National Committee for Financial Stability has the task of overseeing the overall financial system. Therefore, the mission of adopting an integrated approach to examining risks is in its genes. The National Bank of Romania has a history of thinking “globally” about the Romanian financial system, which is of enormous help for the National Committee for Financial Stability. The Financial Supervision Authority itself has to develop its conceptual and operational arms in this regard. The very organizational map of the Financial Supervision Authority shows the attention granted to integrated supervision. Thus, a directorate for financial integration is a novelty and has a prominent role to play. It is commendable that its staffing has tried to bring in highly experienced individuals. But, however experienced these people are, there is a lot they need to understand better in order to fulfil their mission. For the sake of fairness, it should be said, that integrated supervision is at the beginning in many European Union member states. And even where it has a longer history, its performance is not stellar.

It covers an array of conceptual and operational issues such as: the need for integrated financial supervision; risk-based supervision; corporate governance for non-banking financial institutions; the risk management capacity of financial institutions; operational and systemic risks from an integrated perspective; macroprudential and micro-prudential supervision instruments; central bank oversight of financial markets infrastructure; supervision of conglomerates; stress testing for a sound financial system; institutional coordination at the European Union level, and, not least, consumer protection. BIS central bankers’ speeches  1  Europe is not yet out of the woods when it comes to overcoming a very deep financial and economic crisis. There are some good signs, but there is still quite a long way to go – as Mario Draghi recently reminded us in the Committee on Economic and Monetary Affairs of the European Parliament on December last year. The major lessons of the financial crisis are incorporated into this reform. We mostly recognize now that price stability is not sufficient for ensuring financial stability and light touch regulation has failed. There is a derailment of finance, that needs to be corrected, and this is the objective of reforms under way in Europe and the United States. Interconnectedness has grown immensely in the latest couple of decades against the backdrop of technological change (new IT technologies) and financial deregulation. Consequently, systemic risks have grown enormously, banks and other financial entities have neglected them and regulation and supervision underestimated them.