1.2.1 The introduction of an EU network of supervision

In October 2008, the Commission set-up a High Level Group chaired by Jacques de Larosière to advise on the future of European financial regulation and supervision. The High Level Group recommended a new EU financial stability architecture based on a two-pillar structure comprising macro-and micro-prudential oversight.1 This structure was set up in 2010, starting operations on 1 January 2011, in the form of the European System of Financial Supervision (ESFS). The ESFS consists of the European Systemic Risk Board (ESRB), for the conduct of macro-prudential oversight,2 and the European Supervisory Authorities (ESAs) for supporting supervisory coordination and convergence of supervisory standards. The respective Member States’ competent and macro-prudential authorities are also part of the ESFS.

The ESAs are the European Banking Authority (EBA)3, the European Securities and Markets Authority (ESMA)4 and the European Insurance and Occupational Pensions Authority (EIOPA)5. The EBA, ESMA and EIOPA are the successors of the Committee of European Banking Supervisors (CEBS), the Committee of European Securities Regulators (CESR) and the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS), respectively. The difference between the ESAs and their predecessors is that the ESAs have a more formal structure (being decentralized agencies instead of comitology committees) and have more binding powers.6 The ESAs work together in the Joint Committee of the European Supervisory Authorities for overall and cross-sectoral coordination, with the aim of ensuring cross-sectoral supervisory consistency. The EBA is the competent ESA in the field of banking and is therefore the most relevant ESA for the banking sector.