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New EU regulation deal agreed New EU regulation deal agreed
(about 1 hour later)
European Union finance ministers have agreed plans for a new Europe-wide system of financial regulation.European Union finance ministers have agreed plans for a new Europe-wide system of financial regulation.
The deal paves the way for the establishment of several new watchdogs responsible for supervising the financial system in all EU countries.The deal paves the way for the establishment of several new watchdogs responsible for supervising the financial system in all EU countries.
An agreement comes despite earlier concerns from the Chancellor, Alistair Darling. According to a UK Treasury spokesman, the government has secured important concessions as part of the deal.
Before the meeting, the chancellor warned against giving the EU too much power over the City of London. These include preventing the EU from deciding on future bailouts that could be paid for by British taxpayers.
New regulatorsNew regulators
Under the plans approved by finance ministers from the 27 EU members, three new supervisory authorities will be created to oversee banks, insurers and investment firms.Under the plans approved by finance ministers from the 27 EU members, three new supervisory authorities will be created to oversee banks, insurers and investment firms.
National supervisors, such as the FSA, must remain responsible for supervising individual companies Alistair DarlingNational supervisors, such as the FSA, must remain responsible for supervising individual companies Alistair Darling
A separate body, known as the European Systemic Risk Board, is planned to oversee the wider stability of the European financial system as a whole.A separate body, known as the European Systemic Risk Board, is planned to oversee the wider stability of the European financial system as a whole.
It will be led by European central bankers and national regulators, and is likely to be based in London.It will be led by European central bankers and national regulators, and is likely to be based in London.
The proposals were drawn up by the European Commission following the financial crisis which occurred in the wake of the collapse of Lehman Brothers more than a year ago.The proposals were drawn up by the European Commission following the financial crisis which occurred in the wake of the collapse of Lehman Brothers more than a year ago.
The Commission has said it hopes to see the new pan-European system established in the new year, although the plans still need to approval of the European parliament.The Commission has said it hopes to see the new pan-European system established in the new year, although the plans still need to approval of the European parliament.
CompromiseCompromise
The agreement appears to be the result of a compromise between the UK and other member states.The agreement appears to be the result of a compromise between the UK and other member states.
Following the meeting, a senior Treasury spokesman said the government had secured an agreement that would not allow the EU to make decisions on financial bailouts which could result in British taxpayers picking up the tab.
He said the government had also ensured the FSA would remain the sole supervisor of individual financial firms in the UK.
Before the meeting, Mr Darling warned against more European regulation of the UK financial services.Before the meeting, Mr Darling warned against more European regulation of the UK financial services.
Writing in the Times, he said giving the EU extra powers in the City would be a "recipe for confusion".Writing in the Times, he said giving the EU extra powers in the City would be a "recipe for confusion".
"We must resist measures, however superficially alluring, that could undermine the effective functioning of our cherished single market," he said."We must resist measures, however superficially alluring, that could undermine the effective functioning of our cherished single market," he said.
"National supervisors, such as the FSA, must remain responsible for supervising individual companies. Making companies directly accountable to more than one authority is a recipe for confusion.""National supervisors, such as the FSA, must remain responsible for supervising individual companies. Making companies directly accountable to more than one authority is a recipe for confusion."
Mr Darling said London should not be seen in the same way as other European financial centres.
"The reality is the real competition to Europe's financial centres comes from outside our borders. And that London, whether others like it or not, is New York's only rival as a truly global financial centre," he said.