Europe's 27 finance ministers will meet at the European Council to reach an agreement on three new bodies which would give Brussels new powers over national regulators and European banks posing systemic risks.
The outstanding agreement will revolve around the three European Supervisory Authorities (ESAs) intended to take decisions on micro prudential financial activity in the EU. Ministers more or less reached an agreement on a macro-prudential supervisor, the European Systemic Risk Board, in October.
UK will not stop the process
EU diplomats believe that Britain is isolated and that the remaining 26 member states will give the ESAs their full support.
There have been four different camps in the process of negotiations and the UK has been alone in its trenchant position, diplomats say. "One group wants more supervision, one is satisfied with the present proposals, one is critical of certain aspects and then there is the UK," a source said.
Though diplomats admit that ministers will still be looking for clearer guidelines about the EU's direct intervention into national regulation - the main sticking point for the UK - the issue is unlikely to stall negotiations.
"Mainly ministers will be asking what kind of majorities will be needed in the new supervisory bodies," one EU diplomat said.
UK wants unanimous vote on supervision
The UK stalled negotiations in October on ESAs as the country's chancellor, Alistair Darling, wanted the EU to clarify exactly what powers the ESAs would have if a member state failed to implement decisions taken by the bodies (EurActiv 21/10/09).
Ministers will likely be asked to vote on both macro- and micro-prudential proposals next year. The macro-prudential supervisor requires a unanimous vote and the micro-prudential ESAs need a qualified majority to pass into legislation.
The British delegation will be insisting on a unanimous agreement for both bodies, diplomats say.
The UK's interpretation of the supervisory authorities is that they belong to a single package, and therefore both belong to one unanimous vote.
ESAs to cede more power to EU
The British argument goes that the current language on ESAs allows Brussels to overrule national governments and intervene in the business of financial institutions.
Though the UK has sought assurances that the EU "will not impinge on fiscal sovereignty," diplomatic sources say the draft law still allows the EU to directly supervise firms.
The ESRB, on the other hand, will have a kind of moral power with the possibility of naming and shaming parties who are believed to be pursuing undue financial risks.
The body will have no legislative powers but will instead rely on "high-level peer pressure" from its members, EU Internal Market Commissioner Charlie McCreevy said when the body was unveiled in September.
