As the three new pan-European financial watchdogs began to operate at the start of 2011, the European financial sector will usher in a new era of tough supervision.
"The date of Jan. 1, 2011 marks a turning point for the European financial sector," Michel Barnier, the European commissioner for internal markets and services, said in a statement released on Saturday.
The three new bodies - the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA), will oversee financial activities for banks, markets, insurances and pensions, respectively.
They will be able to mediate among national financial supervisors and to impose temporary bans on risky financial products and activities.
The three new bodies can also impose decisions directly on financial institutions, such as banks, so as to remedy breaches of EU law when national supervisors fail to act.
Barnier pointed out that the crisis highlighted the limits and sometimes the failures of Europe's supervision of the financial sector. The lack of coordination among EU member states also contributed to the crisis.
"Europe is learning the lessons from the crisis and that is why today, it is giving itself a new apparatus of surveillance and supervision," he said.
Besides the three new agencies, the European Systemic Risk Board (ESRB), which will monitor and warn about the general build-up of risk in the Europe's economy, also started to work last month.
The ESRB is tasked with developing a common set of indicators to permit uniform ratings of the riskiness of specific cross-border financial institutions and make it easier to identify the types of risks they carry.
The board is attached to the European Central Bank and presided over by ECB President Jean-Claude Trichet for the first five years.
Barnier said the ESRB was not meant to steal power from national authorities but to enhance cooperation among them.
"With this new framework of financial supervision in Europe in place, we are putting into effect in practical terms the lessons learnt from the crisis," he said.
Barnier noted that the new supervision framework was at the heart of the ongoing financial reforms and will be followed by other reforms, such as those for credit rating agencies, hedge funds, derivatives and stress tests.
VietNamNet/Xinhuanet
