The institutional framework of the new financial regulation model in the european union

Mónica Puente Regidor

doi:10.5209/noma.55267

Abstract

The economic crisis, which has been with us since 2008, has called into question the supervision and financial regulation model in the European Union (EU). The economic governing system, which was born after the creation of the European Economic and Monetary Union (EEMU), has been shown to be clearly insufficient in order to deal with the impact of the recession which has hit the twenty seven Member States of the EU. This situation has illustrated the need for a wider cooperation between the States, some supervisory institutions with a more systematic vision and a better designed and more specific financial system. The objective of this article is to analyze the modifications which have been made to the supervision model of the European financial system, the problems which have resulted and the lines of improvement which must be studied if the intention is that the supervision model of the European financial system is going to be a trustworthy, efficient and effective model in the future. To do this, the changes in the renovation of the financial supervision model in the EU, which have been made since 2011, will be studied. In the first place, the macro-prudential and microprudential supervision through the restructuring of the three fundamental bases of the financial system will be analyzed: banking system, market values and insurance. Secondly, a critique of the model will be carried out and the most problematic points of the system will be outlined in order to highlight areas which need improving and finally, the conclusions will be presented.

Highlights

As well as announcing the depth of the economic crisis five years ago, which we continue to suffer with no clear signs of recovery, the fall of the Lehman Brothers investment bank (USA 2007) revealed to everyone the incapacity of the existing systems of supervision and regulation to prevent, control and manage the systematic effects of risk to an increasingly global World.In November 2008, the G20 which covers the most powerful nations in the World, decided to institutionalize the Financial Stability Forum (FSF) which is a forum for debate on global financial stability after carrying out analysis on the housing boom crash in United States and the resulting global consequences
The Financial Stability Board was created in April 2009, a group which has the aim of establishing the coordination of the States and with the objective of developing and promoting the implementation of effective supervision and regulation as well as other policies in the financial sector in order to achieve financial stability
The objective of the project is to carry out an analysis of the supervision and regulation of the financial system of the European Union (EU) primarily, as from 2011, with the fundamental element of the renewing of the economic management model which has been implemented to improve the coordination and economic policy among European member states

Summary

Introduction

As well as announcing the depth of the economic crisis five years ago, which we continue to suffer with no clear signs of recovery, the fall of the Lehman Brothers investment bank (USA 2007) revealed to everyone the incapacity of the existing systems of supervision and regulation to prevent, control and manage the systematic effects of risk to an increasingly global World. Continuing the FSB strategy and to provide a transparent system, solvency of the financial entities and protection for the retail investor To achieve these objectives, the EU has created new norms and organisms in order to prevent problems and assure that it regulates and supervises the activity of financial agents correctly. The objective of the project is to carry out an analysis of the supervision and regulation of the financial system of the EU primarily, as from 2011, with the fundamental element of the renewing of the economic management model which has been implemented to improve the coordination and economic policy among European member states. We will provide a critique of this system and suggest possible areas of improvement in order to reach the proposed objectives in an efficient and effective way and lastly, we will establish some final conclusions

State of the question

The supervision and regulation of the European financial system as from 2011

Findings

Conclusions