Speech Roldan: Governance and Structure of European Finance

09 March 2005

In his speech on the panel on “Banking and Financial Integration in Europe” held in Frankfurt, the chair of the Committee of European Banking Supervisors (CEBS) commented on the future governance and structure of an integrated financial market in Europe.

Mr Roldan pointed out that the Lamfalussy approach does not dictate a single solution to cover every eventuality, but rather it has a lot of flexibility built into it and provides for a range of different degrees of centralisation and commonality of approach according to the issues on the table.

However, it is too early to make any profound assessment as the Level 2 committee has not yet been formally established due to some technicalities, and the only piece of EU banking legislation currently going through the legislative process - Basel II - is not a 'true' Lamfalussy directive.

“Personally”, he said, “I would be in favour of looking at the whole body of existing banking legislation and evaluating it in the light of the Lamfalussy approach. This is obviously a major task and requires case-by-case assessment, but it certainly seems a logical progression and could be very helpful for the industry.”

“Over-regulation was named as a number one risk facing the global banking industry in a recent survey by the Centre for the Study of Financial Innovation. The European banking industry is not sufficiently homogenous that we can apply one set of rules to cover all banks.”

“We also have to respect the subsidiarity principle. Supervisory tasks are best performed as close as possible to supervised entities, although an environment of increased cross-border and cross-sectoral activity requires arrangements to facilitate necessary convergence and information flows.”

“What we need is a framework which gives sufficient consistency of approach to ensure a level playing field, to avoid unnecessary supervisory burden, and to encourage banks to develop their risk management techniques.“ “Some people express doubts about whether level 3 convergence agreements - particularly supervisory co-operation between home and host supervisors - can really be effective, given that they are not binding.”

“I would reiterate my view that Level 3 is very important. It is about building a European supervisory culture. A body of level 3 guidance is emerging, which should deliver regulation and supervision fit for the 21st century EU banking sector.”

Full speech

© Graham Bishop