Yesterday (2 December), EU finance ministers meeting at the European Council were able to secure an agreement on the three European Supervisory Authorities (ESAs) once Britain was satisfied with three provisions intended to guarantee fiscal sovereignty.
The ESAs would be divided into three sub-groups to oversee different kinds of financial institutions: the European Banking Authority (EBA), the European Securities and Market Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA).
In October, Britain had stalled negotiations to rubberstamp the three bodies because the country's chancellor, Alistair Darling, sought clarification on how the watchdogs would intervene in member states' autonomous decision-making (EurActiv 21/10/09).
Prior to that, the country had sought a safeguard saying the Union would "not impinge on fiscal sovereignty".
Yesterday's agreement came after the Council of Ministers hammered out a compromise called a "triple-lock" safeguard: first a member state can appeal to the Economic and Financial Affairs Council to suspend a decision by the ESAs, second, a simple majority of at least 14 member states could overturn it, and if those measures do not work, a country can send another appeal to the European Council.
In Britain, yesterday's outcome is being presented as a failure to transfer the "burden of proof" to the three ESAs. British papers report that the Council secured the opposite as the onus will fall on Britain – or any other complaining country – to get a simple majority to overturn an ESA decision.
Britain’s Conservative party has attacked Darling for ceding fiscal control to Brussels.
"It is clear that they can now make binding decisions which could have a fiscal impact but all that national governments can do is to appeal against these decisions," said Mark Hoban, shadow financial secretary for the Conservatives.
However, the watchdogs still have some hurdles to pass and will now undergo the scrutiny of the European Parliament.
Some MEPs have already echoed the same views held by Britain, and the ESAs will likely attract tense debate.
Criticising yesterday's decision, Alliance of Liberals and Democrats for Europe leader Guy Verhofstadt MEP accused the Council of "trying to impose its own views and its own agenda".
As co-legislator, the European Parliament will be taking a closer look at the separation of micro-prudential and macro-prudential supervision, Verhofstadt warned.
