BRUSSELS, Jun 19 – Britain won assurances at an EU summit that new pan-European financial authorities will not be able to force governments to make emergency bank bailouts, according to draft conclusions.
Joining Washington in a drive to tighten financial supervision, EU leaders agreed in principle on Thursday, the first day of a two day summit, to set up three pan-Europe bodies to oversee banks, insurers and securities firms.
London, one of the biggest financial markets in the world, had been wary that the new authorities would be able to order governments to make emergency spending to prop up the financial system by for example bailing out banks.
In order to appease Britain, the leaders agreed that "decisions taken by the European Supervisory Authorities should not impinge in any way on the fiscal responsibilities of member states," the draft conclusion said.
However, the leaders agreed that the new bodies should otherwise have "binding and proportionate decision-making powers" to ensure that national regulators are in line with EU rules.
The conclusions also call for EU central bankers to chose the head of new European Systemic Risk Board, which is supposed to monitor risks to financial and economic stability and issue recommendations to avoid them.
Britain, the biggest of the 11 EU countries not to use the euro, had also been put off by an original proposal that the new risk watchdog be chaired by the president of the European Central Bank.
After leaders give formal approval to the conclusions on Friday, it will be up to the European Commission to hammer out the details of the reform in a new set of proposals due in early autumn, with the aim of implementing them next year.