European powers to supervise banks
New European powers to supervise banks and financial institutions in the wake of the economic crisis must not be used to undermine national sovereignty, an MEP has warned.
Conservative Kay Swinburne was speaking after the European Parliament approved what Chancellor George Osborne has called a "new financial supervision architecture for the EU".
The vote ends months of negotiations between MEPs, EU finance ministers and the European Commission, and ushers in a new system of central financial supervision, although the deal leaves day to day control over banks and other financial institutions in the hands of national authorities.
But eurosceptics have warned the legislation could see the erosion of effective national responsibility.
Ms Swinburne added: "This deal ensures that cross-border markets can be supervised by cross-border institutions which co-ordinate the work of national regulators. It provides the markets with a common rule book and greater certainty over the key questions of who will regulate what and where.
"Instead of handing over the keys to the City of London, this deal places it in a kind of European Neighbourhood Watch programme. Peer oversight will provide us all with loudhailer warnings when there are macro systemic or particular risks."
But she warned: "This package must be seen as the high-water mark of European financial supervision and not the first step towards handing over these powers to Brussels.
"With this new certainty the financial markets can begin to look to the future."
The rules approved create three new European Supervisory Authorities (ESAs) and a European Systemic Risk Board (ESRB) which will ensure fair and open competition between cross-border financial institutions.
The three new Authorities, will be responsible for tightening surveillance of the banking, securities and markets, and insurance sectors.