EBA欧洲银行-25-September-2009_-CEPR_ESI-2009-Annual-Conference_-Giovanni-Carosio_final_22页_274kb

CEPR/ESI 2009 Annual Conference Summary

Core Content

The CEPR/ESI 2009 Annual Conference, held in Venice on 25 September 2009, focused on the need for a more effective and unified European supervisory framework in light of the financial crisis. The conference was led by Giovanni Carosio, the Chair of the Committee of European Banking Supervisors (CEBS), and outlined key lessons from the crisis, proposed changes to the supervisory structure, and challenges that remain to be addressed.

Main Points

I. Lessons from the Crisis

• Too Big to Fail / Too Big to Save: The crisis highlighted the risks associated with large and complex financial institutions. There are two interpretations:

  • Institutions should not be allowed to fail to prevent systemic risk and contagion.
  • However, allowing such institutions to fail is difficult due to the lack of effective crisis management and resolution tools, and the incompatibility of rules across jurisdictions.

• Micro-Macro Link in Supervision: The existing framework lacked a strong connection between micro-level supervision and macro-level risk assessment, leading to inconsistencies and inadequate responses.

• Loss of Trust in Delegated Monitoring: The reliance on private agents and national supervisors for risk monitoring led to divergences in enforcement and a "light touch" approach, which was insufficient during the crisis. This issue is particularly pronounced in the European context.

• European Dimension: The too-big-to-fail problem challenges the principles of freedom of settlement and mutual recognition within the EU. Government bail-outs and differing deposit guarantee schemes have created distortions both within and across member states.

II. The New European Supervisory Authorities

• Lamfalussy Structure: The existing 3L3 Committees (EBC, EIOPC, ESC, FCC, CEIOPS, CESR) will be replaced by three new European Supervisory Authorities (ESAs):

  • European Banking Authority (EBA)
  • European Insurance and Occupational Pensions Authority (EIOPA)
  • European Securities and Markets Authority (ESMA)

• Objectives of CEBS:

  • Promote efficient and effective supervision.
  • Ensure the safety and soundness of the EU financial system.
  • Support consistent implementation of EU banking legislation.
  • Foster convergence of supervisory practices.
  • Encourage information exchange and cooperation.

• Functions of the ESAs:

  • Develop binding technical standards.
  • Collect micro-prudential data.
  • Coordinate supervisory responses in emergencies.
  • Promote a common supervisory culture.
  • Investigate breaches of EU rules.
  • Participate in colleges as observers.
  • Facilitate dialogue and assist in reaching joint decisions.

III. Meeting the Objectives

• Micro-Macro Link:

  • The European Systemic Risk Board (ESRB) will focus on macro-prudential supervision, identifying risks and issuing warnings.
  • CEBS will continue and strengthen micro-prudential risk assessments and stress tests.

• Quality and Convergence of Regulation:

  • The EBA will issue directly applicable binding standards, interpretations, and conduct peer reviews to ensure convergence and adequacy of national supervisory arrangements.

• Disagreement Resolution:

  • The EBA may intervene in cases of disagreement between national supervisors, especially in cross-border groups, to reach a binding decision.

• Emergency Response:

  • The EBA has the authority to require national supervisors to act in emergencies to protect financial stability. If necessary, it may take direct action against individual institutions.

• Colleges and Information Collection:

  • The EBA will manage a central information system for cross-border groups and participate in college meetings as an observer.

IV. Unresolved Issues

• Crisis Management and Resolution Tools: The current framework is not equipped to handle crisis management and resolution effectively. The EU Commission plans to propose new legislation on early intervention, crisis management, and deposit guarantee schemes.

• Home-Host Responsibilities: Clarifying responsibilities between home and host countries in a crisis remains a challenge. While a group structure with stand-alone subsidiaries could help, it may also reduce efficiency and complicate crisis resolution.

Conclusions

• CEBS Agenda: CEBS aims to restore confidence in financial markets, prevent a setback in financial integration, and promote convergence of supervisory practices at both European and global levels.

• Short-Term Priorities:

  • Provide advice on the new supervisory architecture and crisis tools.
  • Complete the first stress test on 22 cross-border groups.
  • Ensure that colleges for cross-border groups are operational by the end of 2009.
  • Develop new guidelines in 2010 for joint risk assessments and supervisory planning.
  • Continue CEBS participation in college meetings.

Contacts

• CEBS: http://www.c-ecs.org
• Giovanni Carosio: Chair of CEBS, giovanni.carosio@c-ecs.org