Cablegate: Eu Financial Regulatory Reform: Chief Regulator Has | Scoop News

Cablegate: Eu Financial Regulatory Reform: Chief Regulator Has

 

VZCZCXRO4050
PP RUEHIK
DE RUEHFT #3013/01 3241255
ZNR UUUUU ZZH
P 201255Z NOV 09
FM AMCONSUL FRANKFURT
TO RUEHC/SECSTATE WASHDC PRIORITY 2465
RUEHRL/AMEMBASSY BERLIN 1192
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCNFRG/FRG COLLECTIVE

UNCLAS SECTION 01 OF 02 FRANKFURT 003013

SENSITIVE

STATE FOR EEB (NELSON, HASTINGS), EEB/IFD/OMA (WHITTINGTON), EUR/CE
(HODGES, SCHROEDER)
TREASURY FOR ICN (KOHLER), IMB (MURDEN, BAKER) AND OASIA

SIPDIS

E.O. 12958: N/A
TAGS: EFIN ECON GM

SUBJECT: EU FINANCIAL REGULATORY REFORM: CHIEF REGULATOR HAS
CONCERNS ABOUT THE LOSS OF NATIONAL AUTHORITY

REF: A)BRUSSELS 0290
B)BRUSSELS 1393

FRANKFURT 00003013 001.2 OF 002
1. (SBU) Summary: A recent conversation between Consulate
Representatives and Joachim Sanio, the President of the German
Federal Financial Supervisory Authority (BaFin), revealed concerns
over strong French influence in the new EU financial regulatory
agencies currently being created. Sanio commented on the short
window of opportunity for EU regulatory reform, which explained the
pace and legal means by which the EU Commission acted. Sanio also
believes that the EU Commission will gain power over financial
regulation at the expense of national regulators. END SUMMARY.
Background: Overview of EU Financial Regulatory Reforms
——————————————— ———-
2. (U) In February 2009, a high-level group chaired by the former
Banque de France Governor Jacques de Larosihre drafted a series of
proposals to strengthen the EU financial regulatory system in
response to a request from EU Commission President Barroso. The de
Larosiere Report became the foundation of a series of reforms
undertaken by the EU. By May, a “Communication” was adopted, with
draft legislation proposed on September 23, and further defining
legislation written by October 26. The EU Council and Parliament
currently are considering these proposals.

3. (U) Under the new legislation, a European Systemic Risk Board
(ESRB) will be established to detect risks in the financial system
as a whole. In addition, a European System of Financial Supervisors
(ESFS) composed of national supervisors will encourage cross-border
practices in financial supervision.

4. (U) The ESFS will consist of three new “European Supervisory
Authorities” that will replace the existing “Level 3 committees.”
Like the current Level 3 committees, they will cover the following
areas: 1)banking (“the European Banking Authority” (EBA) replacing
CEBS), 2)securities (“the European Securities and Markets Authority”
(ESMA) replacing CESR); and 3)insurance and occupational pensions
(“the European Insurance and Occupational Pensions Authority”
(EIOPA) replacing CEIOPS). The objective of these “Authorities” is
to: 1)coordinate the work of national supervisors; 2)arbitrate in
the case of cross-border disagreements; 3)harmonize national
regulatory rules; and 4)directly supervise certain pan-European
institutions which are regulated at the EU level, such as Credit
Rating Agencies.

 

Remarkable Speed Results in “A Legal Coup d’etat”
——————————————— —-
5. (SBU) The financial crisis, according to Sanio, has opened a
unique window of opportunity for the EU financial reforms. Sanio
believes that the speed has been driven by French interests, which
were at the heart of the original proposal. There is also a uniquely
pro-European constellation in favor of reforms in the EU Commission
and the British government. (Sanio believes this window will close
in May 2010, the latest date that Gordon Brown has to call a new
election.)[….]

via Cablegate: Eu Financial Regulatory Reform: Chief Regulator Has | Scoop News.

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