The structure of financial supervision in europe: About single financial supervisors, twin peaks and multiple financial supervisors

European Business Organization Law Review

Volumn 8, Issue 2, 2007, Pages 237-306

  Wymeersch, Eddy ^a  

^a GHENT UNIVERSITY   (Belgium)

Author keywords

bancassurance; banking supervision; conduct of business code; financial stability; financial supervision; functional supervision; insurance supervision; integrated supervision; prudential supervision; securities supervision; single supervisor; twin peaks

Indexed keywords

EID: 84927032031     PISSN: 15667529     EISSN: 17416205     Source Type: Journal    
DOI: 10.1017/S1566752907002376     Document Type: Article

References (169)

1. T. Padoa-Schioppa, 'EU structures for financial regulation, supervision and stability', Brussels, 10 July 2002, available at: http://www.ecb.int/press/key/date/2002/html/sp020710.en.html;
2. T. Padoa-Schioppa, 'Financial Supervision: Inside or Outside Central Banks', in J.J.M. Kremers, D. Schoenmaker and P.J. Wierts, eds., Financial Supervision in Europe (Cheltenham, Elgar 2003) p. 160;
3. C. Goodhart, 'The Organisational Structure of Banking Supervision', Financial Stability Institute (BIS) (November 2000), also appears in Banca Monte Paschi di Siena, Economic Notes, Vol. 31 (Siena 2002) pp. 1-32;
4. C. Goodhart, 'Financial Supervision from an Historical Perspective: Was the Development of Such Supervision Designed or Largely Accidental?', in National Bank of Finland, The Structure of Financial Regulation, available at: http://www.bof.fi/eng/7tutkimus/GoodhartPresentation.pdf;
5. A. Sainz de Vicuna, 'The ESCB and its role in banking supervision', in R.M. Lastra, ed., The Reform of the International Financial Architecture (The Hague, Kluwer Law International 2001) pp. 313-323.
6. More in general, see Kremers, Schoenmaker and Wierts, op. cit. n. 1; J. Kremers, D. Schoenmaker and P. Wierts, 'Cross-Sector Supervision: Which Model?', in R. Herring and R. Litan, eds., Brookings-Wharton Papers on Financial Services: 2003 (Washington DC, Brookings Institution Press 2003), pleading for a European system of financial supervisors in tandem with a centralised body;
7. D. Schoenmaker and S. Oosterloo, 'Cross-Border Issues in European Financial Supervision', Brookings-Wharton Papers on Financial Supervision (2003) p. 226;
8. M. Andenas, 'Who Is Going to Supervise Europe's Financial Markets?', in M.T. Andenas and Y.V. Avgerinos, eds., Financial Markets in Europe: Towards a Single Regulator? (London/The Hague, Kluwer Law International 2003) pointing to the ECB;
9. A. Freytag and D. Masciandaro, 'Financial Supervision Unification and Central Bank Independence: Is There Any Trade Off.?', available at: http://www.pubchoicesoc.org/papers2005/Freytag-Masciandaro.pdf;
10. A. Freytag and D. Masciandaro, 'Financial Supervision Fragmentation and Central Bank Independence: The Two Sides of the Same Coin', University of Lecce Economics Working Paper No. 76/37 (October 2005), available at: http://ssrn.com/abstract=837124;
11. D. Masciandaro, ed., Handbook of Central Banking and Financial Authorities in Europe (Cheltenham, Elgar 2005).
12. For the most recent official position, see the FSC's Report on Financial Supervision - the so-called Franque Report - of 2 February 2006. For previous reports, see the CESR's so-called Himalaya Report, 'Which Supervisory Tools for the EU Securities Markets?', Doc. 04-333f, 25 October 2004, available at: http://www.cesr-eu.org/index.php and the so-called Lamfalussy Report, 'Final Report of the Committee of Wise Men on the Regulation of European Securities Markets' available at: http://ec.europa.eu/internal-market/securities/docs/lamfalussy/wisemen/final-report-wise-men-en.pdf. On this subject, opinions differ from strong support for a European regulator to outright opposition, as well as many intermediate positions. Those in favour of centralisation include: M. Andenas, 'Who is Going to Supervise Europe's Financial Markets', E. Pan, 'The Case for a Single European Securities Regulator', Y. Avgerinos, 'The Need and Rationale for a European Securities Regulator' and G. Thieffry, 'After the Lamfalussy Report: The First Steps towards a European Securities Commission', all four in Andenas and Avgerinos, op. cit. n. 1; Y. Avgerinos, 'EU Financial Market Supervision Revisited: The European Securities Regulator', Jean Monnet Working Paper No. 7/03 (2003), available at: http://www.jeanmonnetprogram.org/papers/03/030701.html; I. van den Burg, 'Centraal Europees toezicht is efficiënter dan lead supervision', NVB Bulletin (June 2005) pp. 6-8, available at: http://www.nvb.nl/scrivo/asset.php?id=11660; I. van den Burg, 'Roep om een Europese toezichthouder op de financiële sector', 27 July 2006, available at: http://www.Treasury.nl; P. Billot, 'European Financial Markets: Do They Need a Single Regulator?' (April 2005), available at: http://www1.jonesday.com/pubs/pubs-detail.aspx?pubID=S726; G. Hertig and R. Lee, 'Four Predictions about the Future of EU Securities Regulation', 3 Journal of Corporate Law Studies (2003) pp. 359-377, available at: http://www.effas.com/pdf/hertig-lee.pdf#search=%22hertig%20Lee%20Four%20predictions%22; Schoenmaker and Oosterloo, loc. cit. n. 1, also published in D.G. Mayes and G.E. Wood, eds., The Structure of Financial Regulation (London/New York, Routledge 2007), pleading for an ECB-like structure for prudential supervision. In 'Central Banks and Financial Authorities in Europe: What Prospects?', in Masciandaro, op. cit. n. 1, at p. 438, Schoenmaker allows some room for 'policy competition'. Conversely, many writers are hesitant towards or even firmly opposed to a European institution. See X. Vivès, 'Restructuring Financial Regulation in the European Monetary Union', 19 Journal of Financial Services Research (2001) pp. 57-82, available at: http://ssrn.com/abstract=273734; E. Ferran, Building an EU Securities Market (Cambridge, Cambridge University Press 2005) especially ch. III; H. Davies, 'The European Single Financial Market: Mirage or Miracle?', available at: http://www.fsa.gov.uk/Pages/Library/Communication/Speeches/2002/sp94.shtml; K. Alexander, 'Establishing a European Securities Regulator: Is the European Union an Optimal Economic Area for a Single Securities Regulator?', Working Paper, available at: http://www.cerf.cam.ac.uk/publications/files/WP%2007%20-%20Kern%20Alexander%20v3.pdf; K. Lannoo, 'Does Europe Need an SEC? Securities Market Regulation in the Financial Markets in Europe: Towards a Single Regulator?', Paper prepared for the European Capital Markets Institute, November 1999. R. Lastra, 'The Governance Structure for Financial Regulation and Supervision in Europe', London Financial Regulation Seminar, donSchool of Economics, 19 May 2003, also appears in 10 Columbia Journal of European Law (2003) pp. 49-65. See further European Savings Banks Group, 'The Future Organisation of Financial Regulation and Supervision in the European Union', 25 August 2002. An open position is taken by N. Moloney, EC Securities Regulation (Oxford, Oxford University Press 2002) p. 897.
13. C. Briault, 'The Rationale for a Single National Financial Regulator', FSA Occasional Paper No. 2 (1999), available at: http://www.fsa.gov.uk/pubs/occpapers/OP02.pdf#search=%22Briault%20rationale%20for%20a%20single%22;
14. C. Briault, 'FSA Revisited, and Some Issues for European Securities Markets Regulation', in Andenas and Avgerinos, op. cit. n. 1, at p. 323;
15. M. Taylor and A. Fleming, 'Integrated Financial Supervision: Lessons from the Northern European Experience', World Bank Policy Research Paper (1999), available at: http://wbln0018.worldbank.org/html/FinancialSectorWeb.nsf/(attachmentweb)/wp002223/$FILE/wp002223.pdf#search=%22integrated%20financial%20supervision%20Northern%20European%20experience%22.
16. M. Taylor and A. Fleming, 'Integrated Financial Supervision: Lessons from the Scandinavian Experience', Finance and Development (December 1999), available at: http://www.imf.org/external/pubs/ft/fandd/1999/12/taylor.htm.
17. For an interesting comparative and empirical overview on a worldwide basis, see M. Čihák and R. Podpiera, 'Is One Watchdog Better Than Three? International Experience with Integrated Financial Sector Supervision', IMF Working Paper No. 06/57 (2006), available at: http://www.imf.org/external/pubs/ft/wp/2006/wp0657.pdf#search=%22is%20one%20watchdog%20better%20than%20three%22.
18. E. Ferran, 'Examining the UK's Experience in Adopting the Single Financial Regulator Model', Brooklyn Journal of International Law (forthcoming), available at: http://ssrn.com/abstract=346120;
19. G. di Giorgio and C. di Noia, 'Financial Market Regulation and Supervision: How Many Peaks for the Euro Area', 28 Brooklyn Journal of International Law (2003) p. 463.
20. An expanded version of this article appears as G. di Giorgio, C. di Noia and L. Piatti, 'Financial Market Regulation: The Case of Italy and a Proposal for the Euro Area', in Andenas and Avgerinos, op. cit. n. 1, at pp. 397-420.
21. F. Heinemann und M. Schüler, 'Finanzmarktregulierung und -aufsicht in der Europäische Union', Arbeitskreis Europäische Integration 2004/1-2, available at: http://www.aei-ecsa.de/tagung-eu-financialmarkets-bericht.pdf#search=%22sch%C3%Bcler%20zew%22.
22. D. Llewellyn, 'Institutional Structure of Financial Regulation and Supervision: The Basic Issues', World Bank Seminar, 6-7 June 2006, available at: http://info.worldbank.org/etools/docs/library/232743/Llewellyn-OverviewPaper2006-final.doc;
23. D. Llewellyn, 'Integrated Agencies and the Role of Central Banks', in Masciandaro, op. cit. n. 1, at p. 109; European League for Economic Cooperation (ELEC), 'Financial Supervision in Europe: Time for a European System' (2006), available at: http://www.epc.eu/en/er.asp?TYP=ER&LV=293&see=y&t=2&PG=ER/EN/detail&l=&AI=594.
24. For a broad overview, see K. Lannoo, 'EU Financial Regulation and Supervision Beyond 2005', CEPS Report (2005), available at: http://ceps01.link.be/files/ProspectusBeyond2005.pdf#search=%22CEPS%2C%20EU%20financial%20regulation%22. See further K. Lannoo, 'Challenges to the Structure of Financial Supervision in the EU', CEPS Report (July 2000).
25. See the Commission's periodically updated 'Financial Integration Monitor', available at: http://ec.europa.eu/internal-market/finances/fim/index-en.htm. For an analysis, see C. Gjersem, 'Financial Market Integration in the Euro Area', OECD Economics Department Working Paper No. 368 (October 2003); D. Schoenmaker and S. Oosterloo, 'Financial Supervision in an Integrating Europe: Measuring Cross-Border Externalities', 8(1) International Finance (2005) pp. 1-27.
26. On the importance of this distinction for analysing the state of integration in European regulatory action, see E. Wymeersch, 'The Future of Financial Regulation and Supervision in Europe', 42 CMLR (2005) pp. 987-1010.
27. See Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast), OJ 2006 L 177/1; Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006 on the capital adequacy of investment firms and credit institutions (recast), OJ 2006 L 177/201.
28. For the present state of preparation of this Directive, see: http://ec.europa.eu/internal-market/insurance/solvency2/index-en.htm and http://www.ceiops.org/content/view/5/5/.
29. See Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 on the activities and supervision of institutions for occupational retirement provision, OJ 2003 L 235/10-21.
30. On the basis of a European Directive of 30 May 1994 on deposit-guarantee schemes, OJ 1994 L 135.
31. Especially under the European Tax Savings Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments, OJ 2003 L 157/38.
32. In Belgium, the so-called Gutt operation of 6 October 1944 replaced all currency in circulation after the war. See H. Van der Wee and M. Verbreyt, Oorlog en monetaire politiek, de Nationale Bank van België, de Emissiebank te Brussel en de Belgische regering, 1939-1945 (Nationale Bank van België 2005) p. 657 et seq.
33. The fall of Arthur Andersen is a well-documented case of the dangers of disrespect of ethical principles. See B.L. Toffler, Final Accounting: Ambition, Greed and the Fall of Arthur Andersen (New York, Broadway Books 2003).
34. On the financial supervisor's liability, see M. Tison, 'Do Not Attack the Watchdog! Banking Supervisor's Liability after Peter Paul', CMLR (2005) p. 48.
35. F. Rossi, 'Tort Liability of Financial Regulators, A Comparative Study of Italian and English Law in a European context', EBLR (2003) p. 643;
36. C. Proctor, 'Financial Regulators, Risks and Liabilities', Butterworths Journal of International Banking and Financial Law (2002) p. 71;
37. M.T. Andenas and D. Fairgrieve, 'To Supervise or to Compensate?', in M.T. Andenas and D. Fairgrieve, eds., Liber Amicorum in Honour of Lord Slynn of Hadley: Judicial Review in an International Perspective (The Hague, Kluwer Law International 2000).
38. CESR, 'Protocol on Mediation Mechanism of the Committee of European Securities Regulators' (August 2006). Cf. AMF, 'La charte de la mediation', available at: http://www.amf-france.org/documents/general/3822-1.pdf.
39. On financial education and literacy, see OECD, 'Recommendation on Principles for Good Practices for Financial Education and Awareness' (July 2005), available at: http://www.oecd.org/dataoecd/7/17/35108560.pdf. The UK FSA has also developed an investor education programme, see: http://www.fsa.gov.uk/financial-capability/. A guide to the provision of financial services education for consumers can be found at: http://www.fsa.gov.uk/pubs/policy/P11.pdf.
40. See the comparative surveys of the financial conditions drawn up by the Irish supervisor for a broad range of financial services, including current accounts, home insurance, credit card costs, etc., available at: http://www.ifsra.ie/frame-main.asp?pg=%2Fconsumer%2Fcr%5Fintr%2Easp&nv=%2Fconsumer%2Fcr%5Fnav%2Easp. The Dutch AFM publishes best offers for similar services identifying the banks that offer the best buy. A chat box is available to visitors of the site to exchange experiences on said products, at: http://www.geldwaardering.nl/geldwaardering/. Compare with the UK FSA: http://www.fsa.gov.uk/consumer/compare/index.html.
41. See the discussion in Italy about the takeover of Banca Antonveneta by Dutch ABN-Amro, ultimately leading to proposals by the EU Commission to change Art. 16 of the Banking Directive. See C. McCreevy, 'Improving the supervisory approval process for mergers and acquisitions', Proposal for a Directive improving and clarifying the procedure and criteria for the prudential assessment of acquisitions and increase of shareholdings in the financial sector, Brussels, 12 September 2006, available at: http://europa.eu.int.
42. See the BIS Core Principles for Effective Supervision: 'each authority should have operational independence&'. New version according to the consultative document of April 2006, available at: http://www.bis.org/publ/bcbs123.pdf. See also IOSCO Principle A.2, stating that the 'regulator should be operationally independent&'. IOSCO Objectives and Principles of Securities Regulation (February 2002), available at: http://www.iosco.org/library/pubdocs/pdf/IOSCOPD154.pdf#search=%22Objectives%20and%20principles%20of%20securities%20regulation%2C%20february%202002%22.
43. See Art. 51 of the CAD Directive of 20 March 2000, replaced by Art. 120 of the Directive relating to the taking up and pursuit of the business of credit institutions (recast), OJ 2006 L 177/1.
44. See Art. 8(1)(b) of the First Life Insurance Directive, which in fact excludes any commercial activity other than insurance. Cf. Art. 8(1)(b) of the First Non-Life Insurance Directive 73/239/EEC of 24 July 1973.
45. See Art. 21(1) of the First Non-Life Insurance Directive and ECJ, Case C-241/97 Försäkringsaktiebolaget Skandia [1999] ECR I-1879.
46. Examples are the deposit taking activities in the United Kingdom, which were brought under the law in the 1978 Act on Deposit-Taking Institutions, applicable to the so-called 'fringe banks'. See Goodhart, 'Financial Supervision', loc. cit. n. 1, at p. 22. A similar stop-gap law was enacted in Belgium in 1964, also dealing with deposit taking by firms other than supervised institutions (Law of 10 June 1964).
47. This factor is generally regarded as the main trigger for the evolution towards the integrated supervisor model. See the statement by the United Kingdom upon the creation of the FSA, cited by Briault, 'Rationale', loc. cit. n. 3, at p. 9. The statement further pointed 'to the complexity of financial regulation', while the pre-existing system '& was not delivering a standard of supervision and investor protection that the public has the right to expect.' See also A. Sykes and T. Allen, 'The United Kingdom', in Masciandaro, op. cit. n. 1, at p. 154.
48. See K. Scott, 'The Dual Banking System: A Model of Regulatory Competition', 30 Stanford L.R. (1977) p. 12 et seq; but see also H. Butler and J. Macey, 'The Myth of Competition in the Dual Banking System', 73 Cornell L.R. (1988) p. 677.
49. This line of thought has been developed in the United States especially by R. Romano, 'Empowering Investors: A Market Approach to Securities Regulation', in K.J. Hopt, et al., Comparative Corporate Governance (Oxford, Clarendon Press 1998) p. 143. However, the thesis remains controversial.
50. C. Goodhart, P. Hartmann, D. Llewellyn, L. Rojas-Suarez and S. Weisbrod, Financial Regulation: Why, How and Where Now? (London, Routledge 1998) pp. 159-168, proposes regulation on the basis of objectives, leading to a distinction between six objectives with six separate regulators. See, however, Goodhart, 'Organisational Structure', loc. cit. n. 1, at p. 10; Llewellyn, loc. cit. n. 3, at p. 5, mentions ten functions, but does not advocate as many regulators. Other schemes have been presented. For example, Gjersem, op. cit. n. 6, at para. 86, puts forward a scheme where banking and insurance would be pooled, but securities 'left to the competition authorities and institutions for consumer protection'. The Australian scheme, as proposed by the Wallis Committee in 1997, suggested four lines of supervision with as many supervisory bodies.
51. M. Taylor, Twin Peaks: A Regulatory Structure for the New Century (London, Centre for the Study of Financial Innovation 1995). The 'peaks' refer to the objectives of financial stability v. consumer protection, in fact corresponding to the wholesale v. retail activity. In fact, Taylor proposed a 'three peaks' scheme: apart from the two above-mentioned objectives, there would also be a 'market surveillance agency' (p. 14). A 'four peaks' model was proposed by di Giorgio, di Noia and Piatti, loc. cit. n. 3, at pp. 397-420.
52. Australian Prudential Regulation Authority (APRA), see: http://www.apra.gov.au/aboutAPRA/.
53. Australian Securities and Investments Commission (ASIC), see: http://www.asic.gov.au/asic/asic.nsf.
54. De Nederlandse Bank not only supervises banks, insurance companies and pension funds but also securities firms, investment funds, trust offices and money exchange and money transfer firms. In each case, the supervision is essentially prudential or aims at insuring the integrity of the financial business. See: http://www.dnb.nl/dnb/pagina.jsp?pid=tcm:12-40542-64.
55. The Autoriteit Financiële Markten (AFM) is in charge of supervising market conduct by financial firms. This includes the functioning of the different market segments, their operations and their intermediaries. See: http://www.afm.nl/marktpartijen/default.ashx?FolderId=1052.
56. It was also favoured by the ECB, see ECB, 'The Role of the Central Banks in Prudential Supervision' (March 2001); see also Padoa-Schioppa, 'Financial Supervision', loc. cit. n. 1, at p. 164.
57. E. Tafara, 'Remarks before the World Economic Forum Industry agenda meeting regarding finance, 21 September 2004, available at: http://www.sec.gov/news/speech/spch092104et.htm, giving an historical overview and arguments in favour of a functional scheme. The French system was also considered a 'twin peaks' model. See D. Fairgrieve, 'Twin Peaks à la Française: Reforming Financial Services Regulation in France', in Andenas and Avgerinos, op. cit. n. 1, at pp. 381-395.
58. The term 'conglomerate' is rather unfortunate as it may also refer to the mixed industry and finance groups that characterised the 1970s, most if not all of which disappeared in rather difficult circumstances. Today, the term refers to financial services groups offering several types of services, usually without any other activity in the group than financial business. For a long list of conglomerates under the European definition, see: http://ec.europa.eu/internal-market/financial-conglomerates/docs/20060424-conglomerates-bycountry-en.pdf.
59. Financial Conglomerates Directive 2002/87/EC of 16 December 2002. On supervisory issues, see U.H. Schneider, in G. Ferrarini, ed., Prudential Regulation of Banks and Securities Firms (London/The Hague, Kluwer Law International 1995) p. 77 et seq.
60. See NBB, 'Financial Stability Review 2002', at p. 72 et seq., available at: http://www.bnb.be/Sg/En/Produits/publication/4430e.htm.
61. The subject has been flagged in several official reports, e. g., on so-called 'substitute products'. See CEBS 3L3 Programme for 2006, available at: http://www.c-ebs.org/3L3wp2006.pdf, and the reports on the meetings of the CESR's Market Participants Consultative Panel, at: http://www.cesr-eu.org/index.php?page=groups&mac=0&id=24. Regarding France, see J. Delmas-Marsalet, 'Rapport relatif à la commercialisation des produits financiers' (November 2005), calling attention to several cases of unlevel playing fields.
62. Council Regulation (EC) No. 2157/2001 of 8 October 2001.
63. Directive 2005/56/EC of the European Parliament and of the Council of 26 October 2005 on cross-border mergers of limited liability companies, available at: http://europa.eu.int/eur-lex/lex/LexUriServ/site/en/oj/2005/l-310/l-31020051125en00010009.pdf.
64. For example, the MOU between the Treasury, the Bank of England and the FSA, speech by Eddie George, 21 June 2000, available at: http://www.bankofengland.co.uk/publications/speeches/2000/speech89.htm.
65. Thus, for example, the prudential rules applicable to banks and insurance companies are likely to become more comparable after the Basel II and Solvency II Directives have come into force. Some writers believe that integration will remain elusive. See Gjersem, op. cit. n. 6, at para. 88, referring to M.J. de Luna and T. Rose, 'International Survey of Integrated Financial Sector Supervision', World Bank Policy Review Paper No. 3096 (2003), available at: http://econ.worldbank.org/files/28404wps3096.pdf.
66. Taylor and Fleming, 'Lessons from the Northern European Experience', loc. cit. n. 3, at section 3.9, make the comparison between the two forms of supervision alike to that between a doctor and a policeman.
67. See, inter alia, Taylor and Fleming, 'Lessons from the Northern European Experience', loc. cit. n. 3, at section 1.9.
68. See Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC (Markets in Financial Instruments Directive - MiFID).
69. See Lannoo, 'EU Financial Regulation', loc. cit. n. 4, at p. 12, about the 2002 EU decisions on structuring financial regulation, especially in the field of banking.
70. Tafara, loc. cit. n. 52, refutes the argument as multiple supervisors - as is the case in the United States - regularly have overlapping competences. Padoa-Schioppa, 'Financial Supervision', loc. cit. n. 1, at p. 163, warns of unregulated zones.
71. Several documents refer to the delegation of supervisory powers, see, e. g., the Franque Report, loc. cit. n. 2. For an analysis, see E. Wymeersch, 'Delegation as an Instrument for Financial Supervision', Financial Law Institute Working Paper No. 2007-04 (2006).
72. All authors concur on this factor: Briault, 'Rationale', loc. cit. n. 3, at p. 13; Goodhart, et al., op. cit. n. 45, p. 147; Taylor, op. cit. n. 46, at p. 4.
73. Taylor and Fleming, 'Lessons from the Northern European Experience', loc. cit. n. 3, at section 1.9.
74. Reference should be made to Pillar III, Art. 145 of Directive 2006/48/EC of 14 June 2006, OJ L 177/1.
75. At least provisionally, different solutions will have to be found for applying the own fund requirements. These are the prudential filters, discussed in the Basel Committee Press Releases of 14 June 2006 ('on the use of the fair value option for financial instruments by banks') and 20 July 2006 ('capital treatment of certain items under IFRS'). See also CEBS, 'Guidelines on Prudential Filters for Regulatory Capital', 21 December 2004. They differ between banking and insurance.
76. Briault, 'FSA Revisited', loc. cit. n. 3, at p. 327, mentions such issues as Y2K and the risks and opportunities arising from e-commerce. The FSA has published A Single Handbook of Rules and Guidance.
77. In that sense, see Briault, 'Rationale', loc. cit. n. 3, at p. 25.
78. Art. 1 of MiFID (see supra n. 71).
79. See Third Money Laundering Directive 2005/60/EC of 26 October 2005, OJ 2005 L 309/45.
80. See the statement by the Czech National Bank, 'President Signs Act on Integration of Financial Market Supervision', 22 February 2006, available at: http://www.cnb.cz/www.cnb.cz/en/media-service/press-releases-cnb/2006/060222-integration-act-signed.html. In the same sense, Taylor and Fleming, 'Lessons from the Northern European Experience', loc. cit. n. 3, at section 2.45, heavily stress the argument in relation to staff expertise.
81. Briault, 'Rationale', loc. cit. n. 3, has listed numerous fields in which synergies can be achieved, including support services, data and statistics, authorisation procedures, reporting requirements, consolidation rules and guidance, single entry point, cross-sectoral issues like Y2K, personnel, training, investigations and information to the public.
82. See Ferran, loc. cit. n. 3, at p. 24, referring to Goodhart, et al., op. cit. n. 45, at p. 154; K. Mwenda, and A. Fleming, 'International Developments in the Organisational Structure of Financial Services Supervision', World Bank (2001), available at: http://wbln0018.worldbank.org/html/FinancialSectorWeb.nsf/(attachmentweb)/Uni-Fin-Serv-Supervision/$FILE/Uni-Fin-Serv-Supervision.pdf#search=%22mwenda%20fleming%20International%20developments%22.
83. See Davies in nn. 2 and 3, referred to by Ferran, loc. cit. n. 3, at p. 19 and n. 114.
84. See European Financial Services Round Table (EFR), 'On the Lead Supervisor Model and The Future of Financial Supervision in the European Union' (June 2005), available at: http://www.efr.be/members/upload/news/22676EFRlsvfinal-June2005.pdf.
85. See, e. g., CEBS, 'Guidelines on the Implementation Validation and Assessment of Advanced Credit and Operational Risks Approaches' (4 April 2006) and several other guidelines published by the CEBS.
86. See EFR, loc. cit. n. 109. Strengthening home country control is also favoured by K. Lannoo, 'Challenges to the Structure of Financial Supervision in the EU', CEPS Report (2 July 2000); Wymeersch, loc. cit. n. 7, at sections 3.3 and 3.4. Those firmly opposed to extending the home country principle are C. McCarthy, 'How Should International Financial Service Companies Be Regulated?', Gresham Lecture at Sir Thomas Gresham College, London, 22 September 2004, FSA Speech 2004/196, para. 24, available at: http://www.fsa.gov.uk/pubs/speeches/sp196.html; C. McCarthy, 'How Do We Achieve Regulatory Convergence in Practice?', Conference at the Financial Markets Group, London School of Economics, 8 December 2004, FSA Speech 2004/218, para. 18, available at: http://www.fsa.gov.uk/pubs/speeches/sp218.html; Y. Avgerinos, 'Problems with Home Country Control and Investment Services', in Andenas and Avgerinos, op. cit. n. 1, at p. 83 et seq.
87. Briault, 'Rationale', loc. cit. n. 3, at p. 18, mentions a list of efficiency advantages. H. Davies, 'Designing a System of Financial Regulation', Peking University Lecture, 20 June 2006, available at: http://www.lse.ac.uk/collections/meetthedirector/, strongly underlines this 'single entry point' aspect.
88. Some plead for a twenty-sixth regime at European level. See I. Mortimer-Schutss, 'Regulatory and Supervisory Convergence: The Case for a Dual System with Choice', AEI-Brookings Joint Center, Related Publication 05-39 (December 2005), available at: http://aei.brookings.org/publications/abstract.php?pid=1033. However, there are strong arguments against this solution, see Wymeersch, loc. cit. n. 7, at p. 1008.
89. E. Demaestri and F. Guerrero, 'Financial Supervision: Integrated or Specialized? The Case of Latin America and the Caribbean', 14(2) Financial Markets, Institutions & Instruments (May 2005) pp. 43-106. For some data obtained from the conference of integrated supervisors, see infra n. 218.
90. Goodhart, loc. cit. n. 1., at p. 30 et seq.
91. Lannoo, 'EU Financial Regulation', loc. cit. n. 4, at p. 31, cites the case of clearing and settlement regulation, which ultimately resulted in an independent decision of the Commission, proposing a Code of Conduct.
92. Taylor and Fleming, 'Lessons from the Northern European Experience', loc. cit. n. 3, at section 4.12; Avgerinos, loc. cit. n. 3, at p. 31, as far as a European securities regulator would be concerned.
93. On the issue of independence, see M. Quintyn and M. Taylor, 'Regulatory and Supervisory and Financial Stability', IMF Working Paper WP/02/46 (2002), available at: http://www.imf.org/external/pubs/ft/wp/2002/wp0246.pdf.
94. The standard instruments for accountability relate to the way the members of the board are appointed, the presence of non-executive members on a supervisory board, collective decision making, reporting to the public by way of an annual report, reporting to parliament, judicial review, etc. For the United Kingdom, see Briault, 'Rationale', loc. cit. n. 3, at p. 11, mentioning that a clear allocation of responsibilities between the FSA, the Treasury and the BoE and a framework for close cooperation are important aspects of accountability. See, in general, E. Hüpkes, M. Quintyn and M. Taylor, 'The accountability of Financial Sector Supervisors, Principles and Practice', IMF Working Paper WP/05/51 (2005), available at: http://www.imf.org/external/pubs/ft/wp/2005/wp0551.pdf#search=%22lastra%20Accountability%22.
95. See the statements by Greenspan (p. 18) and Ferguson (p. 30), cited in Goodhart, 'Organisational Structure', loc. cit. n. 1. On the subject in general, see G. dell'Ariccia and R. Marquez, 'Competition among Regulators', IMF Working Paper WP/01/73 (2001).
96. See M. Becht, C. Mayer and H. Wagner, 'Corporate Mobility and the Costs of Regulation', European Corporate Governance Institute Working Paper 07/2006 (May 2006). However, directives in financial matters often provide that the seat should be where the principal place of business is located (post BCCI-rule).
97. L. Bini Smaghi, Speech, Milan, 9 March 2006, available at: http://www.ecb.int/press/key/date/2006/html/sp060309.en.html, strongly underlines this point, also in connection with the position of central banks.
98. Llewellyn, loc. cit. n. 3, at p. 8.
99. Hüpkes, et al., op. cit. n. 124; A. Page, 'Regulating the Regulator - A Lawyer's Perspective on Accountability and Control', in E. Ferran and C.A.E. Goodhart, eds., Regulating Financial Services and Markets in the Twenty-First Century (Oxford, Hart 2001) p. 127; R. Lastra and H. Schams, 'Public Accountability in the Financial Sector', in Ferran and Goodhart, op cit. n. 131, at p. 165.
100. See Lastra and Schams, loc. cit. n. 131, at p. 165 et seq.; also Ferran, loc. cit. n. 3, at p. 25.
101. See Hüpkes, et al., op. cit. n. 124 and the attached tables.
102. Very elaborate in the case of the CESR, see: http://www.europefesco.org/v2/default.asp.
103. Briault, 'Rationale', loc. cit. n. 3, at p. 21. Taylor and Fleming, 'Lessons from the Northern European Experience', loc. cit. n. 3, at section 4.9. Differences of opinion at staff level may be stimulating but should not prevent final decision making by the governing body. For criticism, see Ferran, loc. cit. n. 3, at p. 22.
104. Bini Smaghi, loc. cit. n. 129, rightly mentions the usefulness of committee decisions in this context. Cf. Goodhart, 'Organisational structure', loc. cit. n. 1, at p. 25, advocating internal meetings instead of inter-agency meetings; and Goodhart, et al., op. cit. n. 45, at pp. 146 and 172, admitting the danger of rivalries and disputes.
105. In Germany: BAFin (see section 6.2.3) and in Belgium according to several articles of the Law of 2 August 2002 (see section 6.2.5). In Denmark, too, the legislation applicable to the different sectors has not been harmonised. See Taylor and Fleming, 'Lessons from the Northern European Experience', loc. cit. n. 3, at section 2.47.
106. Taylor and Fleming, 'Lessons from the Northern European Experience', loc. cit. n. 3, at p. 13.
107. See, inter alia, the papers by Llewellyn, loc. cit. n. 3, at p. 28 et seq.; Goodhart, 'Organisational Structure', loc. cit. n. 1, at p. 7 et seq., analyses arguments for and against separation and concludes that combination is to be preferred for developing and emerging countries but less so for developed economies. See also Llewellyn, loc. cit. n. 3, at p. 39. For empirical data, see J. Barth, L. Dopico, D. Nolle and J. Wilcox, 'Bank Safety and Soundness and the Structure of Bank Supervision: A Cross-Country Analysis', paper presented at the 2001 FMA Annual Meeting, Toronto, Canada, 18 October 2001, SSRN 639765.
108. For example, Goodhart, 'Organisational Structure', loc. cit. n. 1, at p. 33.
109. See Freytag and Masciandaro, loc. cit. n. 1, at pp. 10 and 20.
110. Which is the case in Germany and Austria. The relationship is different in France, where the Commission bancaire functions as a separate department of the Banque de France, see: http://www.banque-france.fr/fr/supervi/supervi-banc/cb/cb.htm.
111. For the United Kingdom, see section 6.2.1; for Belgium, within the Financial Stability Committee, see section 6.2.5.
112. Even if, as S. Oosterloo and J. de Haan, 'A Survey of International Frameworks for Financial Stability', Occasional Studies Vol. 1, No. 4, (Amsterdam, De Nederlandse Bank 2003) remark, central banks have a formal legal mandate to undertake this task in very few countries.
113. Llewellyn, loc. cit. n. 3, at p. 10.
114. Mentioned by Goodhart, 'Organisational Structure', loc. cit. n. 1, at p. 43.
115. Goodhart, et al., op. cit. n. 45, at p. 154; A. Crockett, 'Issues in Global Financial Supervision', Speech, BIS (1 June 2001), available at: http://www.bis.org. See Briault, 'FSA Revisited', loc. cit. n. 3, at p. 332, doubts whether differences between 'systemic risk regulator' and a 'deposit protection regulator' could not be taken on board by a single regulator through appropriate differentiation, for example, by differentiating the intensity of supervision. He further deems that cooperation among existing regulators allows them to deal with most of the pending issues.
116. C. Goodhart and D. Schoenmaker, 'Institutional Separation Between Supervisory and Monetary Agencies', in C. Goodhart, The Emerging Framework of Financial Regulation (London 1998);
117. C. Goodhart, The Central Bank and the Financial System (London, Macmillan 1995) ch. 16;
118. M. Taylor, 'Central Bank Independence, The Policy Background', in M. Blair, R. Cranston, C. Ryan and M. Taylor, eds., Bank of England Act 1998 (London, Blackstone 1998) pp. 19-20; Ferran, loc. cit. n. 3, at p. 6, refers to a 'finely balanced act'; Llewellyn, loc. cit. n. 3, at p. 29 et seq., refers to writings by Cukierman (1992), Brimmer (1989) and Heller (1991); Čihák and Podpiera, loc. cit. n. 3, at p. 14, cite the case of a central bank postponing a raise in interest rates out of fear of jeopardising some of the supervised banks or a central bank postponing a bank's failure to avoid a crisis in the financial markets. A bank that is aware of an impending insolvency may prefer to stop all payments to secure its position. See also European Parliamentary Financial Services Forum, 'The structure of Financial Services Supervision' (8 October 2002) and the criticism of the ECB's proposal, 'The role of Central Banks in Prudential Supervision' (2001). The argument was refuted by Padoa-Schioppa, 'Financial Supervision', loc. cit. n. 1, at p. 165.
119. Goodhart, 'Organisational Structure', loc. cit. n. 1, at p. 31.
120. See BIS, 'Enhancing Corporate Governance for Banking Organisations' (29 July 2005), available at: http://www.bis.org/press/p050729a.htm. Group governance issues, including governance of the sectoral subsidiaries, call for increasing attention in today's supervisory practice.
121. See T. Padoa-Schioppa, 'How to Deal with Merging Pan-European Financial Institutions', Speech, ECB, 3 November 2004, available at: http://www.ecb.int/press/key/date/2004/html/sp041103.en.html.
122. In that sense, A. Enria and J. Vesala, 'Externalities in Supervision: The European Case', in Kremers, Schoenmaker and Wierts, op. cit. n. 1, pleading for a cooperative setting.
123. See the resolution of the EU Parliament of 4 July 2006 on the 'consolidation the European financial services industry' calling for opening a debate on the structure of supervision of EU financial markets and to create a committee of wise persons. According to R. Lastra, 'Regulating European Securities Markets: Beyond the Lamfalussy Report', in Andenas and Avgerinos, op. cit. n. 1, at p. 219, the passage in the Lamfalussy Report arguing for Europeanisation of supervision in case the present comitology approach would appear to be insufficient refers to the integration of the different lines of supervision.
124. See infra n. 160.
125. For CEBS, CEIOPS and CESR, see Commission Decision 2001/527/EC of 6 June 2001 establishing the Committee of the European Securities Regulators, OJ 2001 L 191/43; Commission Decision 2004/5/EC of 5 November 2003 establishing a Committee of European Banking Supervisors, OJ 2004 L 3/28; Commission Decision 2004/6/EC of 5 November 2003 establishing the Committee of European Insurance and Occupational Pensions Supervisors, OJ 2004 L 3/30.
126. See the report of the Zimmerli Commission, available at: http://www.efd.admin.ch/dokumentation/medieninformationen/archiv/03023/index.html?lang=en and infra n. 211.
127. The Polish Financial Supervision Authority has been in operation since 19 September 2006, see: http://www.kpwig.gov.pl/index-ang.htm.
128. See: http://www.c-ebs.org; http://www.ceiops.org; and http://www.cesr-eu.org.
129. Especially France, Italy, Spain, Portugal and Luxembourg.
130. In the same sense, see the findings of Freytag and Masciandaro, loc. cit. n. 1, according to which 'the degree of supervision consolidation seems to be inversely correlated with the central bank involvement'. See also C. Goodhart, The Central Bank and the Financial System (Basingstoke, Macmillan 1995) p. 344 (with D. Schoenmaker).
131. Art. L. 310-12 of the Code des assurances, as modified by the Law of 1 August 2003 (see infra n. 181).
132. Loi no 2003-706 du 1er août de sécurité financière, JO no 177 du 2 août 2003.
133. See M. Prada, 'Intervention', COB Bulletin 342 (January 2000). For a comparative overview, see P.-H. Conac, 'La fusion de la COB et du CMF', in H. De Vauplane and J.J. Daigre, eds., Mélanges AEDBF France, III (Paris, Banque Editeur 2001) p. 59.
134. Art. 42 of the Testo Unico Finanziario.
135. See: http://www.frc.org.uk.
136. Taylor and Fleming, 'Lessons from the Northern European Experience', loc. cit. n. 3, at section 2.5, give an overview of the developments that led to the integrated model in the Scandinavian countries. Taylor and Fleming, 'Lessons from the Scandinavian Experience', loc. cit. n. 3, at p. 45, explain why insurance supervision has remained in the hands of the ministry, although the discussion appears to have been going on for quite some time. In Sweden, the central bank has never been in charge of banking supervision.
137. See Taylor and Fleming, 'Lessons from the Scandinavian Experience', loc. cit. n. 3, at p. 43.
138. For an analysis, see B.S. Aamo, in Masciandaro, op. cit. n. 1, at p. 203.
139. For an analysis, see I. Bonde, in Masciandaro, op. cit. n. 1, at p. 182.
140. For an analysis, see H. Bjerre-Nielse, in Masciandaro, op. cit. n. 1, at p. 175.
141. For the German approach, see M. Schüler, 'Integrated Financial Supervision in Germany', ZEW Discussion Paper No. 04-35 (2004), available at: ftp://ftp.zew.de/pub/zew-docs/dp/dp0435.pdf;
142. T. Filipova, 'Concept of Integrated Financial Supervision and Regulation of Financial Conglomerates: The Case of Germany and the United Kingdom', ESNIE Research Paper (2004), available at: http://esnie.u-paris10.fr/en/archives/2004.php?id=63.
143. See J. Sanio, 'The New Single Regulator in Germany', in T. Kuppens, H. Prast and S. Wesseling, eds., Banking Supervision at the Crossroads (Cheltenham, Elgar 2003) p. 55, For an analysis of the German system, see M. Schüler, in Masciandaro, op. cit. n. 1, at p. 288.
144. Bundeswertpapieraufsicht, on the basis of the Finanzmarktaufsichtsbehördengesetz (FMABG). For an analysis, see A. Grünbichler, in Masciandaro, op. cit. n. 1, at p. 159.
145. According to the Central Bank and Financial Services Authority Act 2003. The formula was criticised in J. Westrup, 'Financial Services Regulation in Ireland - The Accountability Dimension', TCD Policy Institute, University of Dublin, Blue Paper No. 10 (17 September 2002), available at: http://www.tcd.ie/Policy-Institute/abstract10.php. For an analysis, see J. Westrup, in Masciandaro, op. cit. n. 1, at p. 355.
146. For a description, see the website of IFSRA at: http://www.ifsra.ie/. IFSRA will also 'monitor competition in the market for financial services by working with the Competition Authority'.
147. The new scheme is not uncontroversial. See 'Financial Supervision Commission in the Works', The Warsaw Voice, 5 April 2006, available at: http://www.warsawvoice.pl/view/11023/; and the ECB's opinion of 2 August 2006, available at: http://www.ecb.int/ecb/legal/pdf/en-con-2006-39-f-sign.pdf#search=%22financial%20supervision%20poland%22.
148. For an analysis of the analysis leading to the adoption of the integrated supervisor, see P. Rococha, 'Two-Phase Process of Integration of Financial Regulation and Supervision in the Czech Republic', Document prepared by the Czech National Bank for the Annual meeting of bank supervisors from Central and Eastern Europe, Dubrovnik, Croatia, May 2004, available at: http://www.hnb.hr/dub-konf/fsi-bscee-2004/prezentacije.htm. In fact, all supervision has been centralised at the CNB.
149. For an analysis, see L. Liive, in Masciandaro, op. cit. n. 1, at p. 229.
150. For an analysis, see L. Balogh, in Masciandaro, op. cit. n. 1, at p. 258.
151. In a statement by the Minister of Finance of 2 April 1999. See Nota inzake de institutionele vormgeving van het toezicht op de financiële marktsector, Kamerstukken II 1998/99, 26 4666, No. 1.
152. The Swiss takeover board, see: http://www.takeover.ch/.
153. The so-called Zimmerli Report (FINMA), 'Integrierte Finanzmarktaufsicht, Sanktionen in der Finanzmarktaufsicht, Erweiterung der Prudentiellen Aufsicht', in Eidgenossisches Finanzdepartement, available at: http://www.efd.admin.ch/suchen/index.html?lang=de&keywords=zimmerli&search-mode=AND&from-day=01&from-month=01&from-year=2003&to-day=07&to-month=09&to-year=2006&mitteilungstyp=&themen-filter= x Zufferey Report.
154. Amt für Finanzdienstleistungen (FMA), an independent government agency, Law of 18 June 2004.
155. See: http://www.rba.gov.au/PublicationsAndResearch/Bulletin/bu-oct95/bu-1095-4.pdf#search=%22council%20financial%20supervisors%20australia%22.
156. As mentioned above, the federal structure of the State often leads to more complex supervisory schemes. For an analysis, see Grünbichler, in Masciandaro, op. cit. n. 1, at p. 159.
157. See the call by David Brown, Chairman of the Ontario Securities Commission, for a pan-Canadian body, Reuters briefing, 20 November 2001; Financial Post: Editorial by Raymond Protti, President of the Canadian Bankers Association, National Post, 8 February 2002 (gives figures about the comparative cost of regulation and number of employees: there are over fifty financial supervisors - federal, provincial and territorial departments and agencies - employing 3,780 employees, compared to the United Kingdom, with 2,765 employees for a four times bigger market). In 2004, Quebec merged several of its regulatory agencies in a new Autorité des Marchés Financiers. See S.J. Struthers and D. Bénay, 'Québec Creates a Single Financial Services Industry Regulator and Responds to the U.S. Sarbanes-Oxley Act', available at: http://www.mccarthy.ca/search/pub-search-results.asp, relating to securities, insurance, trust and saving companies.
158. Stephen L. Harris, 'The Single Financial Market Regulator', 16 June 2006, available at: http://www.carleton.ca/spa/Faculty/Notes%20for%20The%20Single%20Financial%20Market%20CD%20Howe%20June%202006.ppt, raises the issue of creating one single financial regulator, including OSFI, also in light of the difficulties in merging the provincial securities regulators. Insurance-related consumer protection is also provincial, while credit unions and securities companies are supervised at both federal and provincial level. See Llewellyn, loc. cit. n. 3, at p. 36.
159. See: http://www.fscey.gov.tw/ct.asp?xItem=508412&CtNode=2225&mp=5 and http://www.fscey.gov.tw/ct.asp?xItem=508412&CtNode=2.
160. See: http://www.adb.org/Projects/APEC/Market-Intermediaries/Integrated-Financial-Supervision-KOR.pdf#search=%22taylor%20twin%20peaks%20regulatory%22.
161. R. McGregor, 'Beijing Debates New Financial Super-Regulator', Financial Times, 11 September 2006.
162. See, e. g., Taylor and Fleming, 'Lessons from the Northern European Experience', loc. cit. n. 3, at section 4.7.
163. Goodhart, 'Organisational Structure', loc. cit. n. 1.
164. Demaestri and Guerrero, loc. cit. n. 117; R.Y. Siregar and J.E. Williams, 'Designing an Integrated Financial Supervision Agency: Selected Lessons and Challenges for Indonesia', Centre for International Economic Studies, University of Adelaide, Discussion Paper No. 0405, available at: http://www.adelaide.edu.au/cies/papers/0405.pdf; Davies, loc. cit. n. 112; S.A. Lumpkin, 'Alternative Approaches to Supervision of Financial Services', III Conference on Insurance Regulation and Supervision in Latin America, Honduras, 15-18 July 2002, available at: http://www.oecd.org/dataoecd/29/31/1939352.pdf#search=%22alternative%20approaches%20supervision%22.
165. A. Tiwari, 'We Need a Single Regulator', National Post, 31 May 2004, available at: http://osgoode.yorku.ca/media2.nsf/83303ffe5af03ed585256ae6005379c9/14842feeec5694de85256ea1004cb3a3!OpenDocument.
166. On the basis that the Indian markets are still not sufficiently developed, the opposite view is defended by S. Subramanian and N. Hetamsaria, 'Does India Need a Single Financial Regulator?', Rediff News, 13 February 2006, available at: http://www.rediff.com/money/2006/feb/13guest.htm.
167. H. Davies, 'The Role of the Regulator', Speech, Cairo, 17 June 2006, available at: http://www.lse.ac.uk/collections/meetthedirector/.
168. Siregar and Williams, loc. cit. n. 222.
169. For a concurring view, see Goodhart, et al., op. cit. n. 45, at p. 181.