EC proposed reforms to pave the way for further financial integration and a full Capital Markets Union, to promote jobs, growth, and investments in Europe and to strengthen the Economic and Monetary Union. The proposals also include steps to foster the development of financial technologies (fintech) and ensure that sustainability considerations are systematically taken into account in supervisory practices at the European level. To ensure a uniform application of EU rules and promote a true Capital Markets Union, the proposals also entrust ESMA with direct supervisory power in specific financial sectors. In addition, EC is proposing targeted changes to the composition and organization of ESRB, which monitors stability risks for the financial system as a whole.
The reforms will promote further capital market integration following the UK's departure from the EU. They will also introduce changes to the supervisory relations with non-EU countries to ensure proper management of all financial-sector risks. Valdis Dombrovskis, Vice-President for Financial Stability, Financial Services, and Capital Markets Union said: "Financial markets are changing fast. We are seeing renewed cross-border integration, new opportunities in fintech and a boom in sustainable and green finance. The EU needs to act as one player so that we can stay ahead of the curve. More integrated financial supervision will make the Economic and Monetary Union more resilient. These pragmatic proposals will also make it easier for our companies to operate cross-border and build consumer trust." The key features of the proposal include the following:
Stronger coordination of supervision across the EU: ESAs will set EU-wide supervisory priorities, check the consistency of the work programs of individual supervisory authorities with EU priorities, and review their implementation.
Extended direct capital markets supervision by ESMA: EC has proposed to make ESMA the direct supervisor over certain sectors of capital markets across the EU
Improved governance and funding of ESAs: ESAs will take decisions more independently from national interests. Under the new governance system, newly created Executive Boards with permanent members will lead to quicker, more streamlined, and EU-oriented decisions.
Promoting sustainable finance and fintech: ESAs will promote sustainable finance, prioritize fintech, and coordinate national initiatives to promote innovation and strengthen cybersecurity.
Keywords: Europe, EU, Banking, Securities, Insurance, Financial Supervision, Capital Markets Union, Fintech, ESAs, Financial Integration, Sustainable Finance, EC