Some Challenges Facing European Central Banks as Supervising Authority

Vletter- van Dort Hélène M.
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Vletter- van Dort Hélène M.: Prof. Dr. Chair of Banking and Securities law, Erasmus School of Law, University of Rotterdam, The Netherlands

European Company and Financial Law Review, 2012, vol. 9, issue 2, 131-155

Abstract: This article analyses the changes that have been made to the role of the central banks as prudential supervisors in four European member states since the crisis of 2008–2010. In Belgium, France, the United Kingdom and Germany the duty of financial supervision was either attributed to various entities or to one single institution. Since the crisis we see a much higher involvement of central banks in financial supervision, which means that central banking and supervisory powers are moving closer. The increased involvement of central banks has, in the four countries that are discussed in this article, been embedded in a Twin Peaks model, thereby combining macro- and micro prudential supervision. The Netherlands had already moved to a Twin Peaks model in 2002, so well before the crisis. However, the fact that the Dutch central bank was prudential supervisor did not prevent the failure of a couple of large financial institutions in the Netherlands. The question is whether any model is fool proof.While various member states are moving towards a Twin Peaks model, at EU level financial supervision has reinforced its sectoral model with a lot of cross appointments.No matter what model of financial supervision is preferred, the central question is whether the people working at the supervisors are able to link micro-prudential information with macro-prudential information and combine this with monetary policy, nationally as well as internationally, in order to get an overall picture of the present and future status of the financial landscape.

Date: 2012
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DOI: 10.1515/ecfr-2012-0131

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