Reforms have been proposed to the current architecture of financial services committees by the European Commission (EC) adopted Communication on Financial Supervision in Europe, which would in effect replace the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS).

The new proposals, which aim to improve cross-border cooperation and understanding between regulators in Europe, would see the creation of a new European Systemic Risk Council (ESRC) and European System of Financial Supervisors (ESFS), composed of new European Supervisory Authorities.

The announcement was made by President of the EC, José Manuel Barroso: "Better supervision of cross-border financial markets is crucial for ethical and economic reasons. That is why I asked Jacques de Larosière and his group to produce their report. The Commission is making proposals today to help restore confidence, guard against future crises and protect growth and jobs. The new system will help the EU and its Member States to tackle both problems with cross-border firms and the build up of overall systemic risk."

Barroso is urging EU leaders at the June European Council to give their support to the steps he set out, leading to the new architecture up and running in 2010.

Internal market and services commissioner, Charlie McCreevy, added: "Financial supervision in Europe has not kept track with market integration. The crisis has shown that the current system is not sufficiently responsive and not appropriate for a single financial services market. This new system will combine the expertise of all those responsible for safeguarding financial stability, with strong European bodies to coordinate their work. With this initiative, the Commission is responding to the weaknesses identified during the crisis as well as to the G20 call to take action to build a stronger, more globally consistent, regulatory and supervisory system for financial services."

The ESRC would monitor and assess risks to the stability of the financial system as a whole, while the ESFS is designed for the supervision of individual financial institutions, consisting of a robust network of national financial supervisors working in tandem with new European Supervisory Authorities. These will be created by the transformation of existing Committees for the banking securities and insurance and occupational pensions sectors. Implementation arrangements will be monitored and their effectiveness carefully assessed. A full review will take place no more than three years after the entry into force of both pillars of the European financial supervisory framework that is proposed in the Communication.

The European Fund and Asset Management Association (EFAMA) has welcomed the initiative: "The supervisory package is an important step towards a more efficient EU system of financial supervision," commented Peter De Proft, director general of EFAMA. "Now is the time to address the weaknesses in the current arrangements for macro and micro prudential supervision at EU level."

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