Regulating and Supervising Systemic Risk in the European Union: Results of the Post-Crisis Structural Reforms

This thesis contributes new and unique perspectives on the post 2007-09 crisis reform agenda established in the European Union. The focus of the thesis will be specifically on reform of the regulatory and the supervisory framework aimed at mitigating the effects of systemic risk. The starting point will be a review of the literature on the concept of systemic risk which will demonstrate that its unpredictable nature requires a malleable regulatory response. In light of the suggested areas of concern by the pivotal ‘de Larosiere report’, analysis will be provided on the progress achieved so far. On the regulatory front, the systemic risk aspects of the various legislative measures introduced are assessed in terms of their relevance and potential effectiveness. The reformed supervisory framework under the new European System of Financial Supervision (ESFS) requires close scrutiny due to the transfer of power to centralised authorities. Although the reform should be considered a success in terms of reaching its objectives in a timely manner, some critiques and suggestions will be provided on how to carry the framework forward. The thesis will also argue that taking the framework to the next step may require testing the boundaries of European Treaties and its case law in relation to delegation of powers. The measured success of the new framework could however be jeopardised by the recent introduction of the first steps towards a banking union in the Eurozone. By creating a new supervisory dynamic within the EU, it will be argued that such a move raises the potential of creating a ‘two speed’ model of financial supervision in the EU. Additionally it risks polarising the supervisory debate between the European Central Bank and the Bank of England at the detriment of the EU.