Though Swedish Finance Minister Anders Borg spoke of "substantial progress" in finalising the details of the new body, called the European Systemic Risk Board (ESRB), the UK has reportedly blocked the proposal. Further negotiations to reach a European settlement have been pushed back to December.
British diplomatic sources told EurActiv that the UK is not blocking the plan per se, but will be seeking assurances that the ESRB and its sister body, the European System of Financial Supervisors, will be negotiated as one proposal.
Yesterday Sweden, current holder of the EU's rotating presidency, tried to reach an agreement among member states on the ESRB alone. The UK successfully demanded an amendment to the legislative text underpinning the new body.
The new clause says that a final agreement on the ESRB is not on the cards yet.
The UK had signed up to the broader principles of the supervisory body, a diplomatic source said. In June, the UK agreed to a deal that both bodies would form one proposal.
The hesitation on the part of the British stems from concerns that the new body will impinge on the UK's fiscal sovereignty. Agreeing to one could be interpreted as giving a carte blanche for the other body, the argument goes.
"The texts of the two cross-reference each other a lot and should be in one package," the source said.
Additionally, UK finance minister Alistair Darling is waiting for the national parliament to scrutinise the structure and powers of both bodies before signing an EU agreement.
According to the diplomatic source, the British parliament's response is expected at the end of next week.
The ESRB will issue risk warnings and make recommendations to governments believed to be pursuing undue financial risks.
The body will have no legislative powers but will instead rely on "high-level peer pressure" from its members, EU Internal Market Commissioner Charlie McCreevy said when the body was unveiled in September.
