Specific goals of the proposals are:

• to sustainably reinforce financial stability throughout the EU;
• to ensure that the same basic technical rules are applied and enforced consistently;
• to identify risks in the system at an early stage; and
• to be able to act together far more effectively in emergency situations and in resolving disagreements among supervisors.

The proposal notes that "the current financial crisis has highlighted weaknesses in the EU's supervisory framework, which remains fragmented along national lines despite the creation of a European single market more than a decade ago and the importance of pan-European institutions". The proposals are intended to address those weaknesses by creating:

• a European Systemic Risk Board (ESRB) to monitor and assess risks to the stability of the financial system as a whole ('macro-prudential supervision'). The ESRB will provide early warning of systemic risks that may be building up and, where necessary, recommendations for action to deal with these risks.
• a European System of Financial Supervisors (ESFS) for the supervision of individual financial institutions ('micro-prudential supervision'), consisting of a network of national financial supervisors working in tandem with new European Supervisory Authorities, created by the transformation of existing Committees for the banking securities and insurance and occupational pensions sectors. The three European Supervisory Authorities would be:
  • European Banking Authority (EBA)
  • European Insurance and Occupational Pensions Authority (EIOPA), and
  • European Securities and Markets Authority (ESMA).

If adopted, the proposals would result – for the first time ever – in certain financial markets supervisory powers being given to pan-European authorities. Click for the (PDF 24k). The proposal is supported by the three existing EU financial supervisory bodies, the CESR, CEBS, and CEIOPS, which would be replaced by the three new European Supervisory Authorities. Click for their (PDF 45k). The European Commission is urging swift approval by the Council and European Parliament so the new structure could begin functioning in 2010.