Yesterday's (9 June) Ecofin Council failed to reach a political agreement over a number of key issues included in the review of rules and bodies dealing with financial oversight in the EU.
One of the sticking points remained the proposals on micro-supervision of cross-border banks and insurance firms. According to the draft plan, colleges of national supervisors should be established for each transactional group. They should exchange relevant information regarding their monitoring activities and cooperate to settle financial issues.
In case of disagreement and as a "last resort", the Commission proposed that three new established EU authorities for financial markets should have the last word.
"We did not manage to reach an agreement on the powers of the new authorities, on what will happen in case of a disagreement within a college of supervisors," admitted Eduard Janota, Czech finance minister and president of the EU Council.
Some states have indeed adopted a wary approach to the overhaul, which they fear could deprive them of effective control over the financial institutions operating in their territory, ultimately affecting their "fiscal responsibilities". The issue has been put on the agenda of next week's European Council.
Another controversial issue was raised by the UK, which is worried about new external controls imposed on the City, the main financial centre in Europe.
The overhaul suggested by Brussels, in line with the report written by former managing director of the International Monetary Fund, Jacques de Larosière, proposed the establishment of a new European Systemic Risk Council (ESRC) to prevent fresh meltdowns of financial markets.
Ministers substantially backed the proposal, but changed its name to 'European Systemic Risk Board' (ESRB). However, London is opposed to the suggestion that the European Central Bank (ECB) should chair the new body, which would put it in charge of gathering information about the City's activities. Britain is not even a member of the euro zone. London is pushing to allow extra-eurozone central banks to chair the ESRC as an alternative to the ECB.
"The Council considers that the ECB should provide analytical, statistical, administrative and logistical support to the ESRB," read the conclusions of the Finance Council, without mentioning the issue of the chair of the board.
"Even if the document opens another possibility, I am fully confident that the Council will support the Commission's proposal," EU Economics Commissioner Joaquin Almunia told reporters after the meeting. He explained that the ECB is the authority best-suited to carry out this task at EU level.