EU financial market regulation

Financial market regulation aims to ensure market stability

Financial market regulation aims to ensure market stability, © picture alliance / dpa


The financial crisis brought to light weaknesses in the regulation of financial markets. The aim of the regulation developed over recent years is to close loopholes and ensure market stability.

The European System of Financial Supervision (ESFS) was set up on 1 January 2011 in order to better monitor Europe’s finance and banking industries.

For further information click here: ec.europa.eu

In addition to this, in November 2014, the European Central Bank (ECB) took on direct supervision of the 120 largest banks of the eurozone having carried out a comprehensive assessment of the banks, which also comprised stress tests.

In order to strengthen financial institutions and at the same time create a framework for the recovery and resolution of insolvent banks, the Single Resolution Mechanism (SRM) was set up in 2014. From now on, the ECB, EU Commission and the member states will be involved in winding up systemically relevant banks incapable of surviving.

For further information click here: ec.europa.eu

Another important aim of financial market regulation is to make banks more robust. This seeks to stop the failure of an individual bank having negative ramifications on the overall finance sector. The regulation on the structural reform of the banking sector currently under discussion in Brussels thus aims to separate risky business activities from the core credit institute.

A further important point is improved consumer protection for users of financial services. First and foremost this is set to take the form of more transparent products, comparable standards and better protection in the case of institutions going bankrupt.

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