EU finance ministers back supervision compromise

(BRUSSELS) - European Union finance ministers endorsed on Tuesday a compromise deal to create pan-European supervisors to oversee banks, insurers and markets as a way of preventing a new financial crisis.

EU states and the European parliament reached an agreement last week after months of negotiations over how much power to grant to the new agencies, with Britain seeking guarantees that its fiscal sovereignty would be protected.

An EU statement said finance ministers "endorsed an agreement reached with the European Parliament on September 2 on key elements of a reform of the EU framework for supervision of the financial system."

The statement added: "The reform is aimed at establishing a new basis for supervision in Europe, eliminating deficiencies that were exposed during the financial crisis."

The deal creates a European Banking Authority, a European Insurance and Occupational Pensions Authority and a European Securities and Markets Authority.

It also forms a European Systemic Risk Board which would look out for threats to the region's economy.

The deal now goes to the EU parliament which will vote on it at its next plenary session starting September 20. The EU hopes the supervisors will be operational on January 1.

Britain, home to one of the world's biggest financial centres in London, has insisted that decisions of the pan-European agencies should never interfere with a state's fiscal sovereignty.

It fought to limit the ability of the European agencies to intervene in a crisis by obtaining the right to appeal their decisions. However European lawmakers believed such a mechanism would weaken the supervisors and a compromise was finally reached last week that would prevent any "abuse" of the safeguard.

07/09/2010 : Press release 3030th ECONOMIC and FINANCIAL AFFAIRS Council meeting (provisional version) - Brussels, 7 September 2010