Tough new EU watchdogs set to police regulation and banking
Published 03/09/2010 | 05:00
IRISH banks and the Financial Regulator will face much closer scrutiny by EU watchdogs from January next year under a landmark deal sealed in Brussels last night.
The deal will see three EU-level agencies set up to police stock markets, banks and the insurance sector.
Yesterday's agreement also paves the way for a new risk watchdog, chaired by the ECB president Jean-Claude Trichet. Under the legislation, the ECB president will issue colour-coded warnings to governments on risks to their economy, such as swelling asset bubbles.
"We have reached a crucial milestone," EU Financial Services Commissioner Michel Barnier said last night. "We will have the control tower and the radar screens needed to identify risks," he said. Mr Barnier succeeded Charlie McCreevy in the post.
The new authorities aim to overhaul financial oversight in the 27-nation bloc and avoid a repeat of the 2008 financial crisis when EU states struggled to co-ordinate moves to shore up financial institutions.
The regulators will be able to investigate individual country's financial activities or products and, in emergency situations, put in place temporary bans.
The EU agencies can also intervene in supervisory disputes between states, force them into talks and ultimately make a direct order to a cross-border financial group at the centre of a clash between national authorities.
Under yesterday's accord, the European Securities and Markets Authority will take now take charge of supervising credit rating companies such as S&P, Moodys and Fitch.
However, the Government will have the right to appeal decisions handed down by the new agencies if they pose a serious threat to public finances.
The agreement comes a year after the proposals were first tabled, and follows several months of tug-of-war politics as European and national politicians clashed over how much control should be ceded to the new agencies.
A spokesman for the Department of Finance said: "Ireland broadly welcomes the agreement on new EU financial supervision rules, which will mean a more joined-up approach to financial supervision across Europe."
The decision must now be confirmed by EU finance ministers when they meet next week, and again by the full European Parliament when it convenes at the end of the month.