Financial Supervisory and Regulatory Reform of the EU after the Global Financial Crisis

Financial Regulation and Supervision at the EU level has been implemented with the formation of the European Single Market. In the 1980s, there was a significant increase in the number of cross-border financial transactions as free capital movement within the EU territories, mutual recognition of regulation, and supervisory responsibility of the home country were established as the principles of the EU internal financial supervision.However, blind spots in financial supervision have been consistently pointed out as large banks have operated beyond one member country, resulting in a set of problems from mismatch among the financial activities taking place over integrated European Single Market and supervisory authority limited in national boundary. The global financial crisis revealed institu-tional limit of the financial regulation and supervision in the EU. As a result, demands are increasing for reforms on financial supervision and regulation. In particular, new supervisory arrangements should concentrate not only on the prudential of individual financial firms but also on the macroprudential. Furthermore, there are increasing needs for a more integrated financial supervisory institute as the more efficient measure to supervise the integrated European financial markets