Financial Supervision in Europe

This text discusses the implications of financial market integration for the structure of financial supervision in the European Union. It argues that negotiations on a European system of supervisors might lead to a sub-optimal compromise given the evolution of national supervisory models and international financial markets. As integration continues and the most appropriate national supervisory models emerge from a best practice approach, a reform of the organisational structure of supervision in Europe may become necessary. The contributors provide an overview of different arguements surrounding this discussion, and illustrate that several improvements to the present structure of supervision are possible. These include proposals to facilitate the evolution of national models, and concepts to strengthen co-ordination in supervision and in estabilishing clear procedures in crisis management. Detailing financial market developments in Europe and the US, the book questions the incentives for national supervisory authorities to monitor cross-border activities, to exchange information and to take into account the impact of their dealings with the financial systems of other countries.