- The combination of banking union and Brexit justifies a reform of European Banking Authority (EBA) and European Securities and Markets Authority (ESMA) in the near term, in line with the subsidiarity principle. The other EU-level financial authorities (EIOPA, ESRB, SRB and SSM1) do not immediately require a legislative overhaul.
- For operational reasons, the October deadline currently set for the decision on EBA relocation must be respected. In a later phase, EBA's governance may also be reviewed to take into account the framework of banking union as is currently in place, including the SRB and SSM.
- ESMA should be quickly upgraded to a strong and authoritative hub for EU capital markets supervision and more generally financial conduct supervision. This entails an expansion of its supervisory mandate, but also a significant overhaul of its governance and funding framework.
- The accountability of EBA and ESMA and their scrutiny by the European Parliament should be enhanced as a key element of their governance reform.
- Further initiatives, including possibly the merger of the SSM, EBA and EIOPA, separation of the SSM from the ECB, and folding of the ESRB into the ECB may be considered in a more distant future, but not in the near term as they would unnecessarily distract from more urgent tasks.
1. EIOPA = European Insurance and Occupational Pensions Authority (Frankfurt); ESRB: European Systemic Risk Board (Frankfurt); SRB: Single Resolution Board (Brussels); SSM: Single Supervisory Mechanism, also known as ECB Banking Supervision (Frankfurt).