Sven Giegold

Revision of the European Supervisory Authorities: Democratic rights must not be undermined

This contribution is based on previously leaked documents. Fortunately, the Commission has strengthened, not weakened, the position of the Parliament in the final proposal of 20.09.2017


Tomorrow, the Commission will present its proposal for the revision of the European Supervisory Authorities (ESAs), comprising the European Banking Authority (EBA), the European Securities Market Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA). These authorities were founded in reaction to the last financial crisis and operate since 2011 in the area of microprudential supervision.The proposal is supposed to enhance the ESAs legal basis and their ability to act. However, a leak of the proposed revision shows that the Commission strives to improve the supervision of the European financial markets and the financial integration within the Capital Markets Union but fails to address central aspects such as the urgent need for an autonomous budget and weakens the ESAs democratic legitimation.


MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group comments on the proposal:

“We welcome the Commission’s initiative to strengthen the stance of the ESAs, whose role is crucial to delimit financial risk and avoid future financial crises. However, the proposed limitation of the European Parliament’s rights in the nomination of the agencies’ chair persons is an attempt to undermine democracy on the European level. The ESAs are still lacking their own budget line. With limiting the contribution of the General Budget at 40%, private funding has to step in which bears potential conflicts of interest. Against the objective to strengthen the role of the ESAs, the Commission claims for itself the right to withdraw guidelines issued by the ESAs. In this contexts lobbyists in the stakeholder groups shall receive decision making powers without democratic legitimacy. The proposal is on the whole disappointing from a consumer protection perspective. It falls short of what is needed for investors to get a better deal on financial markets.

In the light of the Paris climate agreement and increasing financial risks stemming from climate change, the Commission is right to put sustainable finance on the agenda of the ESAs. We welcome that now all three ESAs will have the power to initiate peer reviews and stress tests, enabling the authorities to operate more autonomously. The proposed change to enable ESAs to monitor third countries is an important step in the right direction, which is likely to gain further importance in the light of Brexit. The Commission’s emphasis on paving the way for technological change through Fintechs will foster the competition in European financial markets, but must avoid regulatory arbitrage or increased financial stability risk.”

Update: The official Commission proposal, published on 20.09.2017, strenghtened the European democracy. From now on, the Parliament would have the right to approve the chairpersons of the authorities, as compared to a simple objection right before.

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