EUROPE - Belgium will focus its energies on implementing the European Systemic Risk Board (ESRB) and streamlining over-the-counter (OTC) derivatives regulation in the final months of its EU Council presidency.
Gertrude Tumpel-Gugerell, a member of the European Central Bank's executive board, said the successful launch of the EU's new watchdog and the enhancement of the crisis management and resolution framework were of "utmost priority".
"We need to ensure the availability of critical data and information, which will be a crucial basis for any future detection and analysis of systemic risk," she said.
"In this regard, it will also be essential to further develop modern tools for the measurement and the early warning of systemic risk."
She said the Commission would release a communication in the coming weeks on crisis management, including proposals for a fundamental reform that would "inevitably imply important changes" in national legal frameworks.
She said she strongly supported the Commission's efforts to build a framework on crisis management that would "strengthen and harmonise the powers of the authorities", including the establishment of cross-border financial stability groups and the possible set-up of resolution funds under a harmonised framework of operation.
The Belgian presidency's second major priority, according to Tumpel-Gugerell, will be to strengthen market infrastructures to "increase transparency and limit contagion".
"One specific priority in this regard for the coming months is the timely adoption and implementation of a new EU regulatory framework for OTC derivatives central counterparties (CCPs) and trade repositories," she said.
Tumpel-Gugerell highlighted three areas where the Commission's recently issued proposal on OTC derivatives could be improved.
"First, while access to central bank liquidity is a particularly robust arrangement for enhancing the liquidity resilience of CCPs, it is crucial to keep in mind the decision to grant such access has to remain entirely subject to central banking discretion, owing to the potential for direct monetary policy implications," she said.
Second, existing responsibilities with regard to CCPs need to be regarded.
"Given that CCPs are subject to various types of regulation, oversight and supervision," Tumpel-Gugerell said, "it would not be appropriate to confer major EU decision-making powers - such as for the specification of prudential requirements and the recognition of third-country CCPs - to a single EU body that does not fully reflect and represent these different functions."
ESMA, she added, should closely cooperate with the ESCB on all "oversight-related matters".
"Third, given the critical importance of a global regulatory level-playing field for both CCPs and trade repositories, EU rules should go much further in requiring ... close convergence with the existing global standards for financial market infrastructures," she said.