The European Parliament has given the last tick of approval to a law creating new EU watchdogs to monitor and reform the European banking system.
The new bodies will help monitor and police EU markets
The parliament of the European Union has cleared the way for a law allowing the creation of new financial supervisory bodies to help prevent a repeat of the financial crisis that nearly brought down the European banking system.
The cross-border agencies would form a framework to help monitor and reform Europe's financial sector by overseeing banks, insurers and the markets.
"This is a historic achievement," said Belgian Finance Minister Didier Reynders, whose country holds the EU's rotating presidency, on Wednesday.
"We are demonstrating that Europe can act quickly but efficiently and remain at the helm of (the group of) G20 countries when it comes to financial reforms," the EU's market regulation commissioner, Michel Barnier, added.
The proposals were reached following extensive dialog between EU member states, the European Commission and EU lawmakers in early September.
Bodies with 'teeth'
Barnier said the new agencies were a sign of progress in the EU
Under the agreement, three new agencies are to be established - the European Banking Authority, the European Insurance and Occupational Pensions Authority, and the European Securities and Markets Authority. The EU hopes to launch these European Supervisory Authorities (ESAs) in January next year.
The new agencies will be equipped with powers to better control financial players, and to act quickly across Europe. The ESAs will be able to temporarily ban certain high-risk financial products - such as "naked short selling" - which Germany acted against earlier this year.
"This new legislation will create a watchdog able to bark and - if necessary - to bite," said EU parliamentary speaker Jerzy Buzek.
A European Systemic Risk Board will also be set up, which will look out for threats to the region's economy. The board will be headed by the president of the European Central Bank, Jean-Claude Trichet, for the first five years.
The new ESAs are due to begin work on January 1.
Author: Darren Mara (dpa/AP)
Editor: Susan Houlton