AFP - The European Commission on Wednesday unveiled plans for a tough new monitoring system for banks and other financial bodies to be in place next year, aiming to better protect investors hit by the crisis.
"Now is the time for action, it will be now or never," said EU commission chief Jose Manuel Barroso, introducing the plans at a press conference.
One of the key proposals is to create a new European Systemic Risk Council (ESRC), to be chaired by the European Central Bank president, which would give EU nations an early warning of threats to financial stability.
The heads of all national central banks would be members of the new body.
The commission hopes the plans will become a major EU response to the crisis which has plunged Europe into a deep recession, sent unemployment soaring and forced governments to pump billions of euros into banks to keep them afloat.
The plan also suggests setting up extra safeguards through a European System of Financial Supervisors (ESFS), consisting of three new EU bodies with legal authority to supervise the banking, insurance and securities sectors.
The three pan-European authorities would replace existing EU consultative committees, but would have added teeth.
In the event of a disagreement between national supervisors, the three bodies could intervene in a mediating role, the text of the proposals said.
Britain, Europe's main financial centre, has signalled some unease at the European Commission's plans, expressing concern about giving legally constraining powers to pan-European authorities.
The question London is asking is "how far is it legal for an EU authority to countermand the decision of a national supervisor without the authority of the courts," a diplomatic source close to the dossier said.
A British government spokesman indicated there was more talking to be done.
"The commission's proposals represent a starting point for further discussions. Any reforms we make within the EU need to be workable, practical and consistent with the approach we are taking internationally," he said.
Barroso assured that "we are not taking away national supervisors' day-to-day role."
The commission said the new ESRC "would address one of the fundamental weaknesses highlighted by this crisis, which is the exposure of the financial system to interconnected, complex, sectoral and cross-sectoral systemic risks."
Barroso said: "Better supervision of cross-border financial markets is crucial for ethical and economic reasons.... The new system will help the EU and its member states to tackle both problems with cross-border firms and the build up of overall systemic risk.
"I now urge EU leaders at the June European Council to endorse the concrete, timetabled steps we are setting out today. I would like the new architecture up and running during 2010," he said.
The 27 EU nations and the European Parliament will have to approve the measures before they can come into force.
EU heads of state and government will consider the plans when they meet in Brussels next month, and legislation could be drafted in the autumn.