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European system of financial supervision

The EU has introduced a specific supervisory architecture, consisting of 3 European supervisory authorities and a board to monitor systemic risks

The European system of financial supervision (ESFS) was introduced in 2010. It consists of

Founding legislation

Both the ESRB and the 3 ESAs started their operation in January 2011, following the adoption of a package of legislative acts. These comprise

In 2011 the EU adopted a further Omnibus II directive to clarify the powers of the new authorities, particularly in the insurance sector.

The adoption of these laws followed the proposals of a Commission communication on financial supervision and the recommendations of the de Larosière expert group. This group was mandated by the Commission to give advice on how to strengthen European supervisory arrangements in light of the failures of financial supervision exposed by the financial crisis. The de Larosière group issued its report in February 2009.

ESAs Q&As

As provided by the Regulations that established the ESAs, the three authorities must forward to the Commission any citizens’ questions that require interpretation of EU law. These Q&As are an important tool for achieving more supervisory convergence across the EU.

The Commission replies to these questions by a Decision of the College of Commissioners, in a separate package for each ESA. Following this, the Commission’s answers are made publicly available on the respective ESAs’ website. You will find the links to the Q&As below.

Review of the ESFS

The regulations establishing the ESRB and the ESAs include provisions for the Commission to publish a general report on the operation of the new authorities and the ESFS as a whole, and a review of the mission and organisation of the ESRB. The Commission issued these reports in August 2014.

Building on these reports and taking into account the results of the public consultation launched in 2013, the public consultation launched in 2016 and the public consultation launched in 2017, the Commission adopted a package of proposals to strengthen the ESFS in September 2017. The proposals aim to improve the mandates, governance and funding of the 3 ESAs and the functioning of the ESRB. This will ensure stronger and more integrated financial supervision across the EU.

On 12 September 2018, on the occasion of President Juncker’s state of the Union address, the Commission published a Communication on strengthening the Union framework for prudential and anti-money laundering supervision. The Communication introduces a proposal for a regulation amending a series of regulations and directives aiming to concentrate anti-money laundering powers related to the financial sector into the European Banking Authority (EBA). The proposal furthermore aims at strengthening the EBA’s mandate to ensure that all relevant authorities effectively and consistently supervise the risks of money-laundering and that they cooperate and share information.

On 21 March 2019 the European Parliament and Member States agreed on the core elements of reforming the European supervision in the areas of EU financial markets.

The agreement, which is an important step to ensure a fully functioning capital markets union, reinforces the role and powers of the European Supervisory Agencies, including that of the European Banking Authority, by strengthening its role in the area of anti-money laundering. More information on this agreement can be found in the press release of 21 March 2019, as well as in the factsheet updated on 1 April.

On 18 April 2019, the European Parliament endorsed the legislation setting the building blocks of a capital markets union, including the review of the ESFS.

On 18 December 2019, the European Parliament and the Council signed Regulation (EU) 2019/2175, which reviews the powers, governance and funding of the ESAs.

On 18 December 2019, co-legislators also signed  Directive (EU) 2019/2177, which amends the Solvency II Directive, the MiFID II Directive and the 4th Anti-Money Laundering Directive. The regulation gives new powers to EIOPA, EBA and ESMA.

Also as part of the ESFS review, Regulation (EU) 2019/2176 of 18 December 2019 amended the Regulation establishing the European Systemic Risk Board.

On 12 March 2021 the Commission launched a targeted consultation on the supervisory convergence and the single rulebook aiming at taking stock of the framework for supervising European capital markets, banks, insurers and pension funds. The deadline to respond to the consultation is 21 May 2021.

On 23 May 2022 the Commission published its report on the operation of the European Supervisory Authorities taking into account the results of the public consultation launched in 2021. The report assesses the ESAs´ tasks activities and follows up on the Commission´s commitment in the 2020 capital markets union action plan to monitor progress towards supervisory convergence.

Analysis of financial markets

The Commission regularly monitors developments in the financial sector in the EU, and has been publishing annual reviews of its monitoring of financial market integration in Europe.

Read more on analysis of financial markets

Insurance and pensions authorities and organisations

Check the list of authorities dealing with insurance and pensions

Supervisory data collection

Supervision of the EU financial system relies on data that is timely, relevant and of high quality. The volume and complexity of the data required to oversee the financial system have grown substantially over the last decade. In parallel, there has been a rapid evolution of digital technologies to collect and analyse such data. EU supervisory reporting rules and the way authorities collect and use data needs to keep pace with these developments.

Read more on supervisory data collection

Documents

Banking union

EU context of anti-money laundering and countering the financing of terrorism