Direct financial supervision in the EU and financial stability

i Nordisk Tidsskrift for Selskabsret
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Directfinancial supervision includes powers to investigate the supervised firm or entity fully; to conduct on-site inspections; to address sanctions such as fines, periodic penalty payments, and other administrative sanctions; and to have full mandate to enforce applicable legal requirements. In the EU, such powers were long only at Member States’ disposal to confer on competent national authorities in the field of financial market supervision. Since the financial crisis of 2007-2008, a new system of financial supervision has been established at the Union level. It partly includes direct financial supervision, and the powers have increased over the years since the crisis. The development has been part of the regulatory tightening of the EU financial markets since the financial crisis, driven mainly by the concern for financial stability.

Moving supervisory competence from Member State level to Union level brings forth several issues, such as constitutional aspects, coordination challenges, and efficiency of the conductance of supervision. Most importantly, perhaps, is the issue of reasons for direct EU financial supervision. Can financial stability justify a shift of competence from national to EU level in this field, and if so, to what extent? This article discusses the rationale of financial stability and its relation to direct financial supervision at the EU level.



. Associate Professor in Private Law, Uppsala University (Docent i civilrätt, Uppsala universitet).

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