Unwin and Bishop analyse two major contributions to the policy discussion on financial reform in Europe – the de Larosière report and the subsequent European Commission communication - and compare them to their British equivalent – the Turner report.
The Turner report "anticipates much that is contained in the de Larosière report and the Commission's communication," write the two experts. But the report responds differently to whether we "need more Europe or less Europe," they assert.
Although the de Larosière report advises the EU not to "centralise for centralisation's sake," it does advocate "more Europe", according to the two experts, and "it is on the question of supervision at the European Union level that the de Larosière report most significantly differs from Lord Turner's thinking".
Unwin and Bishop's paper argues that the Commission communication departs little from the proposals at the heart of de Larosière. Of the two bodies advanced by the Commission communication, the paper singles out the European System of Financial Supervisors (ESFS) as being the more innovative initiative, providing a possible "significant extension of centralised decision-making".
It remains to be seen if the United Kingdom, the most important financial market of the European Union, will support the Commission proposal, note the experts. The UK's penchant for an intergovernmental solution rather than the use of the Community method reminds the authors of the "abortive British 'hard ECU' plan of the 1980s, which was rendered irrelevant by the Treaty of Maastricht in 1991".
Whether the British government continues down this path or moves in step with other European leaders towards a Community method "will not merely be important in itself for a major sector of the British economy," conclude the authors, but "will say a great deal more generally about Britain's future role within the European Union".
