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PRESS RELEASE
3 September 2010
New European Supervisory Framework is set up from 1 January 2011
On 2 September 2010, the European Parliament, the European Commission and the Council came to an agreement on establishing a new EU Supervisory Framework. This decision to become effective from 1 January 2011 is the result of a long process in which Bulgaria, represented by the Ministry of Finance and the Bulgarian National Bank, took active part.
The European Supervisory Framework envisages the establishment of a European Systemic Risk Board (ESRB), European Banking Authority (EBA), European Insurance and Occupational Pensions Authority (EIOPA) and European Securities and Markets Authority (ESMA). Thus, for the first time the necessary instruments for risk identification and crisis prevention in the European financial system are created on European level. Effective tools are provided for better control of financial market participants, which would result in prompt and coordinated efforts for protection of the EU economy and citizens. Adopting the regulations providing for the four new European Supervisory Authorities would strengthen the European dimension of financial supervision.
The European Systemic Risk Board will exercise macro-prudential supervision over the EU financial system. Its purpose is to prevent and mitigate systemic risks, avoid large-scale financial turmoil, and ensure the smooth operation of the domestic market. For the purpose, the European Systemic Risk Board will assess the risks to the stability of the European financial system and will alert for systemic risks also providing recommendations for eliminating them. These can be made both to the EU as a whole or to a single or several member states, to European or national supervisors. Recommendations will not be legally binding for their addressees.
The European Systemic Risk Board will be chaired by the President of the European Central Bank. Bulgaria will be represented by the Governor of the Bulgarian National Bank, Ivan Iskrov.
For streamlining banking sector supervision on European level, a European Banking Authority is set up. Its task will be to coordinate and monitor the activities of large European banking groups to propose standards and guidelines to national supervisors, and monitor their implementation. The establishing of the European Banking Authority will not deprive the national supervisors from their powers, and they will continue to exercise ongoing supervision of individual financial institutions.The European Banking Authority will be able to issue decisions to individual financial institutions if they violate EU law, with regard to settlement of disputes between national supervisors, as well as in case of a crisis situation on EU-level. The Chairman of the European Banking Authority will be elected by the Board of Supervisors, in which Bulgaria will be represented by the BNB Deputy Governor in charge of the Banking Supervision Department, Rumen Simeonov.
For Bulgaria the setting up of the European Banking Authority will provide an opportunity for even more active participation and cooperation for the implementation of its especially important functions, timely information exchange and coordinated efforts with other national supervisors.
The Financial Supervision Commission will represent Bulgaria in the European Insurance and Occupational Pensions Authority and in the European Securities and Markets Authority.
