Presenting a new set of bleak economic forecasts for the euro zone in 2009, Angel Gurria, secretary general of the Organisation for Economic Cooperation and Development (OECD), yesterday (14 January) underlined the increasingly urgent need to monitor cross-border financial institutions operating in the EU in a more consistent manner.
"Circumstances today are proof of that," said Gurria during a press conference in Paris, where the OECD is based. The bail-out or bankruptcy of leading international groups in the last few months has indeed shown how the European system must rely on rushed, one-off measures to address the most negative consequences of the financial crisis.
A report published by the OECD, which brings together most EU countries, the USA, Canada and Japan, calls for an integrated approach to EU supervision.
"Possible options might include the establishment of a single EU financial supervisor or a European system of supervisors with a central agency working in tandem with national supervisors," reads the document.
The OECD's plea follows recent statements by European Central Bank President Jean-Claude Trichet making clear that the ECB would be willing to assume the new monitoring task, if agreement were to be reached among member states. "I trust it might be possible," he said last week at a conference in Paris.
Nevertheless, a key obstacle lies in wait regarding a possible extension of the ECB's powers. The bank only has a mandate to act on behalf of the 16 eurozone countries, thus excluding the UK, Sweden, Denmark, Poland and the majority of the Eastern EU member states, which have not adopted the single currency.
Setting up a new agency in charge of financial supervision thus seems more likely than extending the ECB's powers to non-eurozone members. But even this idea is opposed by EU heavyweights Germany and the UK.
Home to many international groups, both countries prefer the concept of collegial supervision, which would effectively allow them to control branches located in other EU countries.
But smaller member states, especially from Eastern Europe, strongly oppose this idea as they want to retain control of their own banking sectors.
Meanwhile, France and Italy, which are keen to promote more centralised European supervision, especially in view of the G20 discussions, would prefer to address the issue at global level. Italy was among the first to push for the idea, while French President Nicolas Sarkozy backed the concept at a hearing in the European Parliament last September.
The European Commission has so far refused to support the idea of a unique supervisor, citing opposition from national governments.
