The Financial Crisis and the Future of European Financial Supervision Structures

The recent financial crisis has intensified the debate on optimal financial supervision architecture. A broad consensus has emerged around the view that an inadequate regulatory framework and a fragmented supervisory architecture, both nationally and internationally, has not only been at the root of the problem, but has also hampered the efforts aimed at managing the crisis. In Europe, the de Larosière Report provided the direction for reform. The achievement of the main objective to develop a framework for macro-prudential oversight in Europe requires a well-thought set of operations and initiatives as well as improvements in the understanding of the modern financial systems that will produce high quality macro-prudential assessments, leading to the issuance of risk warnings and recommendations whenever potential risk may pose a threat to financial stability.