Strengthening the Governance of National Financial Supervision in the EU : Existing Weaknesses and a Proposal for Reform

The paper is a contribution to the debate on the governance of financial supervision in Europe. It analyses the: [i] rationale for delegation of regulatory and supervisory powers to an independent supervisor; [ii] governance arrangements for independence and accountability of supervision; and [iii] the institutional models for supervision at national level. The paper also examines the extent of the independence and supervisory capacity of national supervisors in Europe by reference to the financial sector assessment programme reports published by the International Monetary Fund and identifies the main weaknesses in the governance of financial supervisors, which also have a negative impact on supervision on a European scale. The paper makes recommendations for a mechanism to address these weaknesses