How Feasible Is the Proposal for Establishing a New European System of Financial Supervisors?

Abstract

The impact of the global financial crisis underlined the serious deficiencies in the architecture of financial supervision in the European Union (EU). The necessary reform in the financial sector is in progress and foresees the establishment of a brand new EU-wide administrative network – the European System of Financial Supervisors (ESFS). This article critically examines the legislative proposals for the reform, more specifically the legal basis for the establishment of the network, the envisaged powers of the participants in the network, and the network’s mechanisms of operation. Based on this analysis, it is asserted that serious constitutional challenges preclude the establishment of the new network while inconsistent drafting would adversely affect its functioning.