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The true reason for the EU’s call to beef up financial regulation

The true reason for the EU’s call to beef up financial regulation
Profile photo of Patrick Barron

From today’s Open Europe news summary:

European Commission considers beefing-up powers of pan-EU financial supervisors

The Financial Times reports that the European Commission is considering plans to beef-up the powers of the three pan-EU financial supervisors, in a bid to address potential supervisory loopholes ahead of Brexit. Valdis Dombrovskis, a vice-president of the Commission, is quoted as saying, “Already you hear there are some disagreements among [EU] member states whether or not some kind of regulatory arbitrage is taking place, so indeed it strengthens the need of the case for regulatory convergence.” The article notes that one of the options under consideration would see the European Securities and Markets Authority (ESMA) been given powers to directly supervise clearing houses, as well as greater oversight over cross-border investment funds.

Source: The Financial Times 

Let’s all consider the true meaning of the Commission’s goals by examining these phrases:

“potential supervisory loopholes”

“regulatory arbitrage”

“the need for regulatory convergence”

The EU is terrified that Brexit will mean that it is losing its stranglehold on ever increasing financial regulation.

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Profile photo of Patrick Barron

Patrick Barron is a consultant to the banking industry. He teaches Austrian school economics at the University of Iowa and Bank Managemant Simulation for the Graduate School of Banking, University of Wisconsin. Visit his blog. Send him mail.

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