Reforming the European System of Financial Supervision is an important step towards completing the Capital Markets Union

Financial integration

While endorsing the Commission's reform proposals, the EESC calls for the principles of subsidiarity and proportionality to be applied

More integrated and strengthened financial supervision is needed to make progress towards the completion of the Capital Markets Union (CMU), the European Economic and Social Committee (EESC) urged at its plenary session in February.

Together with the Banking Union, the CMU will contribute to strengthening the Economic and Monetary Union and the European Single Market by making them safer, more stable and resilient to future asymmetric shocks and thus conferring a stronger position of the EU and its Member States on the global market.

The Committee therefore welcomes the European Commission's proposals aimed at reforming the different bodies of the European System of Financial Supervision (ESFS) by increasing their competences and improving their governance and funding.

The proposed reforms are an important step towards more integration and convergence, said Daniel Mareels (Employers, BE), rapporteur for the EESC opinion on ESFS – Reforms. They provide new building blocks towards realising the CMU and ensure that financial markets are well regulated, strong and stable.

From the Committee's point of view, the ESFS reforms must not lead to new fragmentation but contribute to achieving the final objective stated in the Five Presidents' Report: a single European capital markets supervisor.

The EESC supports the step-by-step approach towards integrated supervision taken by the Commission, even though it advocates swift establishment of the CMU. With regard to further steps of integration, it stresses the need for dialogue and consultation with all relevant stakeholders and public consultations with all interested parties.

The EESC believes that completing the CMU would ensure that businesses have easier access to financing and more financing options; that administrative burdens and costs are reduced; and that consumers and investors have more and better choice and greater protection.

A smoothly operating CMU with integrated supervision would contribute to more cross-border market transactions, and private, cross-border risk sharing would make Member States more resilient and contribute to economic recovery in the euro area. This should be a priority for the European Supervisory Authorities (ESAs).

ESFS reforms: A delicate undertaking

The principles of subsidiarity and proportionality should be applied where possible when establishing the competences of national and ESAs, says the EESC.

In the Committee's view, the new supervisory environment should ensure the greatest clarity and legal certainty for all parties involved and tackle shortcomings in supervision that impede the realisation of the CMU. Duplication of supervision should be avoided.

Regarding the question of funding, the EESC supports the Commission's proposal to make the funding of the ESAs not solely based on taxpayer´s money, but to involve companies that are subject to supervision.

In this regard, Mr Mareels said: If we have to move from purely public funding to a scheme that involves the industry concerned, duplication of costs and additional burdens must be avoided and budgetary discipline exercised.

The new funding scheme is supposed to lead to a fairer distribution of costs, based on the size of the national industry concerned and not on the size of the countries themselves. The EESC believes that any alterations of the distribution of costs should be made in a transparent way and an appropriate control of overall resources should be guaranteed. The industry should be involved appropriately.

Looking to the future, the EESC considers that new developments and modern technologies – such as FinTech – as well as more sustainable financing, in line with international activities and agreements, should be reflected in the system of supervision. This could help to raise stakeholders' confidence in the financial markets.


The European System of Financial Supervision consists of different European Supervisory Authorities (ESAs) – namely the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority – and the European Systemic Risk Board (ESRB). These bodies are subject to the proposed reforms.