The financial crisis: One year on 

Europe's financial woes began after the European Central Bank (ECB)'s massive liquidity injection on 9 August 2007, recalls Lannoo in an August 2008 commentary. In the meantime, "widespread pessimism" has become "an intrinsic feature of the financial sector," he claims. 

Lannoo outlines four major features of the new financial landscape: 

• Central banks are in the driving seat 

"Central banks re-emerged as key actors" during the crisis, argues Lannoo, particularly "as lenders of last resort to the ailing financial system". The ECB, the Federal Reserve and the Bank of England are the "core actors" here, he says, managing to increase their authority. 

• Financial supervisory authorities are a failure 

"The model in several European countries [whereby] prudential supervision was moved away from the central banks to integrated financial supervisory authorities (FSAs) is no longer the benchmark," claims Lannoo. The FSA model favours an "excessively legalistic and box-ticking approach to supervision" that "loses sight of the broader picture". 

• Gaps abound in the European supervisory architecture 

"Diversity in the levels and methods of depositor protection in the EU" could undermine financial market integration, fears the author. He questions the validity of EU finance ministers' belief that the present supervisory framework should not be altered, accusing them of favouring "short-term plumbing" over "a clear, long-term vision". 

• Markets require better tools to address financial institutions 

Current methods of assessing the soundness of financial institutions "seem very imperfect" and regulators should develop "simple tools to allow markets and the public at large to better appreciate the risks inherent in the financial institutions they are dealing with," argues Lannoo. 

The CEPS analysis concludes that a year down the line, "the financial crisis is far from over". Rather, it is deeply rooted and "starting to affect the real economy," it says, warning that "debates on the governance and supervision of banks can only be expected to take an even more central stage after the summer".