The EU as we know it....2

Open Europe tell us that the European Commission has decided to back the banking and monetary reforms proposed by Jacques de Larosiere, the former Governor of the Bank of France, although they have rejected his proposal to implement the reforms gradually and are pressing ahead to complete them by June.

The reforms are far reaching and will apply across Europe, or at least that large part they control. They are proposing to make supervision complete and effective, and will require transparency in derivatives markets and penalise banks whose remuneration policies encourage excessive risk taking (as judged by supervisors?)

With details still to be worked out, two pan-European authorities will be set up. One, under the European Central Bank, will warn national regulators about threats to stability emerging in the financial services industry. The other will monitor day-to-day supervision of banks, insurers and markets.

I suppose it was to be expected that, with G.Brown attempting to lead global regulation, the EU would have to flex its muscles and interfere everywhere even more than it does now.

It will mean the purchase of still more properties in London. It will mean supervisors falling over each other in banks, duplicating and disagreeing. It could mean outside political interference to the advantage of other financial centres wanting to take over from London. It will be very expensive and inhibit innovation.

It will be rushed, with ill thought-out mechanisms to unite competing authorities. If we are concerned about the tripartite system here already, consider what could happen if two further sorts of regulators throw confusion!

Our own apparent chancellor, Mr. Darling, is reported to be opposed to much of what is proposed. I hope that he persuades the effective chancellor to resist this nonsense.