EU sets basis for finance reform

European heads are discussing ways to better regulate financial markets

EU ministers have agreed in principle on a framework for enhanced oversight of the financial sector, with the UK winning key concessions to the plans.

The UK opposed proposals to give a new oversight body the ability to order national governments to use taxpayer money to bail-out failing banks.

It also opposed the European Central Bank heading such a watchdog.

Ministers are meeting at a two day event in Brussels addressing a range of issues including finance regulation.

The UK is worried a pan-European financial framework may undermine national rules.

Prime Minister Gordon Brown backed plans for tighter financial rules but has said ultimately control of the financial system in the UK should rest in the UK.

Any change should not "impinge in any way on the fiscal responsibilities of member states," said the Prime Minister.

"It is only logical that supervisory decisions with an impact on taxpayers must be taken by national authorities," he said.

Though he has repeatedly underlined the need for international cooperation in tackling the financial crisis and its causes, he has also insisted on the importance of national legislation.

Common rules

Changing EU financial regulations is meant to set out common standards for European nations and alter how the region's major financial institutions are supervised.

While such talks have long been considered it was only following the worldwide financial crisis, and the bail-out of major banks, that discussions on the topic have intensified - as governments seek ways to prevent a repeat of the financial crisis.

On Wednesday US President Barack Obama announced a major overhaul of the financial system - the most dramatic since the 1930s Great Depression.

The US plan included stricter market supervision, greater powers given to the Federal Reserve, enhanced consumer protection as well as more international cooperation.