Jun 19, 2009, 7:48 GMT
Brussels - The European Union on Friday set out its vision for a new system of EU-wide financial regulators with legally-binding but significantly limited powers in a draft statement prepared for the second day of an EU summit in Brussels.
The bloc is keen to take control of its financial markets so that they never again suffer the kind of collapse they went through in the autumn.
The council of EU member states 'recommends that a European system of financial supervisors, comprising three new European Supervisory Authorities, be established,' the draft statement, drawn up for final approval by EU leaders on Friday, said.
Those authorities, covering the banking and insurance sectors and stock markets, 'should have binding and proportionate decision-making powers in respect of whether (national) supervisors are meeting their requirements under a single rule book,' the draft said.
But in deference to British complaints that a supervisor with legally-binding powers could order a national government to spend billions in bailing out a major bank, the draft also said that the regulators' powers 'should not impinge in any way' on national budget decisions.
The draft statement also set out a compromise on the sensitive question of who should head a separate body, the European Systemic Risk Board (ESRB), which is tasked with analysing the EU's overall economy for signs of potential future crashes.
France and Germany had wanted the head of the European Central Bank (ECB) to chair the board as a high-profile independent analyst.
But Britain opposed the idea that the ECB chief should automatically get the job, arguing that EU member states should be allowed to choose a different leader if necessary.
The compromise said that the members of the General Council of the ECB would elect the chair of the risk board. The council is made up of the governors of the central banks of the EU's 27 member states.
The basic terms of the agreement were drawn up late on Thursday between the Czech government, which currently holds the EU's rotating presidency, Britain, France, Germany and the head of the ECB, Jean-Claude Trichet.
The summit of the EU's 27 member states was expected to debate the deal on Friday morning, but was not expected to overturn a compromise between the bloc's most powerful players.
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