Page last updated at 11:14 GMT, Wednesday, 23 September 2009 12:14 UK

EU unveils new 'super-regulators'

European Commission President Jose Manuel Barroso
Mr Barroso is pushing ahead on pan-European regulation

The European Union (EU) has unveiled plans for new "super-regulators" across the banking sectors in Europe.

The proposals include a European Systemic Risk Board to warn of future risks, and watchdogs over banks and insurers across the EU's 27 nations.

The EU said it was necessary to prevent another financial crisis, and even suggested deeper reforms.

"The European system can also inspire a global one and we will argue for that in Pittsburgh," it said.

Landmark proposals

Leaders of the G20 are meeting in Pittsburgh later this week.

The reforms, unveiled by European Commission President Jose Manuel Barroso, are the first attempts to create supra-national regulators that can overrule local watchdogs.

As well as a new systemic risk board, which would be staffed by the European Central Bank and based in Frankfurt, the EU has proposed three new bodies to watch banks, insurers and exchanges.

"Our aim is to protect European taxpayers from a repeat of the dark days of autumn 2008, when governments had to pour billions of euros into the banks," Mr Barroso said.

Mervyn King, Governor of the Bank of England
Reports say the UK wants Mervyn King to sit on the new risk board

The UK, with London as the largest financial centre, has signalled unease to giving up some powers to Brussels.

Reports have suggested that the UK is proposing that Mervyn King, the governor of the Bank of England, should be the deputy chief of the new board to make it more palatable.

But a Bank of England spokesman told the BBC that these stories were incorrect, and discussions were still in too early a stage over the final form of any pan-European regulator.

New rules

The EU agreed at a summit in June to create regulators that would be able to impose binding rules on national authorities such as the UK's Financial Services Authority (FSA).

Lack of co-ordination has been blamed for making the financial crisis worse, with national authorities not aware of the true size of banks' balance sheets within their borders.

In addition to the systemic risk board, the other three regulators would be the European Banking Authority, the European Securities and Markets Authority, and the European Insurance and Occupational Pensions Authority.

The regulators would set standards that would apply across Europe, and could order national financial regulators to adopt the rules within one month if they were found not to be complying.

If the situation continued, the European Commission could then demand that the national watchdog takes specific action.

The proposals need the approval of all 27 national governments as well as the European Parliament to take effect.

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