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The EU must respond to make sure that we have effective crisis management in place to prevent, manage and resolve future crises in the financial system, Alistair Darling said in a letter to Ecofin colleagues in response to the de Larosiere report.
“We should consider fundamental reforms to the system of regulation and supervision”, Darling said. “We should not shy away from radical options”.
The letter sets out a number of principles for supervision, and proposes the creation of:
Ø a new macro-prudential early warning system, independent but bringing together the ECB and non-euro zone central banks, as well as supervisors and finance ministries from across the EU;
Ø a new single micro-prudential rulemaking body, over time replacing the Commission and national bodies role in setting technical rules, to set the EU's rules for EU financial services;
Ø a new EU rules on financial infrastructure; and
Ø a fundamental review of the risks and safeguards around cross-border banking through branching.
The full letter is attached below.