Supervisory architecture in the EU: where should we go from here?

This chapter reviews different aspects of the supervisory architecture in the EU and analyzes the case for possible reforms in a post-pandemic framework characterized by a deep technological transformation of the industry and increased awareness of climate-related-risks (CRR). The pandemic and the increasingly perceived relevance of climate change for economic and financial stability have further strengthened the case for close coordination between monetary, microprudential and macroprudential policies. The larger set of entities which are now active in the market for financial services and the need to favor, as much as warranted, a level playing field among them tend to support models based on a functional rather than a sectoral distribution of supervisory responsibilities. In the European case, the above arguments support the enlargement of the ECB's responsibilities and tools in the area of macroprudential policies. Moreover, the need to substantiate the capital markets union speaks in favor in seeking to transfer more direct responsibilities to European authorities, particularly in the area of the supervision of consumer protection, capital market activities and AML/CFT and on the oversight of rules affecting the activity of big techs.