EU Finance Ministers Agree On Financial Supervision

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European Finance Ministers reached a consensus over a new framework for financial supervision in its meeting in Brussels on Wednesday. Accordingly, the new system of market regulation would ensure that laws are implemented in the same way in every nation.

The Ecofin meeting, chaired by Swedish finance minister Anders Borg, decided to formulate three new authorities to supervise banking, insurance, pension and securities. A separate European Systemic Risk Board will watch and recommend major threats.

However, the supervisory groups cannot dictate how EU governments should spend public money and member states would be responsible to decide, when a crisis is occurring. Also, the meeting outlined an appeal procedure. Now, the deal will be placed before the European Parliament for approval.

"We found a compromise," French Finance Minister Christine Lagarde said. "Not everyone was on the same wavelength," she told reporters.

Earlier in the week, French President Nicolas Sarkozy said regarding last week's appointment of Michel Barnier as Commissioner, "I want the world to see the victory of the European model, which has nothing to do with the excesses of financial capitalism." Barnier is a former French agriculture minister.

After Sarkozy's comment, UK Chancellor Alistair Darling warned in an article in the Times newspaper that giving more powers to the European Union to regulate the British financial services would be a "recipe for confusion". It is in all of Europe's interest that they prosper alongside their close European partners, he added.

Yesterday, the British Bankers Association said French President Sarkozy comments regarding last week's appointment of Barnier as Commissioner have damaged public confidence in the EUs new institutions. His claim that the appointment of Barnier to the internal market portfolio would curb the free-wheeling Anglo-Saxon model of finance - undermines the principle that commissioners serve all member states, not merely their home countries, the BBA added.

European Finance Ministers reached a consensus over a new framework for financial supervision in its meeting in Brussels on Wednesday. (Market News Provided by RTTNews)