Brussels will present a package of measures meant to "reinforce financial stability throughout the EU […] to ensure that the same basic technical rules are applied and enforced consistently," and "to identify risks in the system at an early stage" by establishing a new European Systemic Risk Board (ESRB), according to a draft paper seen by EurActiv.
The proposal will also try to provide the EU with a legal framework allowing the European institutions "to act together far more effectively in emergency situations and in resolving disagreements among supervisors".
Under the Commission's proposal, this task will be assigned to a new European System of Financial Supervisors (ESFS) composed of three new supervisory authorities in the banking, securities and insurance and occupational pensions sectors.
However, the controversial matter of who should foot the bill in the event of the failure of a cross-border institution - so-called burden-sharing - has been left out. "Burden-sharing is the elephant in the room," an EU official close to the dossier commented, explaining that the topic would not be part of this first package, which is primarily meant to solve technical rather than political issues.
Burden-sharing is a thorny political issue, and it has already emerged in the context of bailing out cross-border banks like Fortis and ING during the current financial crisis.
Indeed, it remains uncertain who will pay for potential new failures. The Commission could try to address the issue with a new proposal to be released in October, but this is still the subject of tough negotiations.
In June, the European Council gave the EU executive a mandate to address the issue and make "concrete proposals for how the European System of Financial Supervisors could play a strong coordinating role among supervisors in crisis situations," read the summit's conclusions.
The Council, however, also stressed that the proposals should "fully respect the responsibilities of national authorities in preserving financial stability and in crisis management in relation to potential fiscal consequences," and should "fully respect central banks' responsibilities, in particular with regard to the provision of emergency liquidity assistance".