Finance ministers from the EU's six biggest economies (E6) agreed among themselves on Friday to support more centralized capital markets supervision, in a breakthrough crucial for deeper integration of Europe's fragmented capital markets.
The push for financial market players to be supervised at a European Union rather than national level is part of the EU's plan to redirect trillions of its citizens' savings, now idling in bank deposits, into more productive investment in Europe.
Access to such a large amount of capital for investment would boost the bloc's chances of competing against the United States and China.
Supervision of significant market infrastructure would be gradually transferred to the European Securities and Markets Authority in Paris, the finance ministers of Germany, France, Italy, Poland, Spain and the Netherlands agreed after they met in Berlin on Thursday to discuss the issue.
The issue of handing over local powers to supervise trading platforms, central counterparties and central securities depositories to the EU has been difficult because of vested national interests and opposition from Ireland and Luxembourg and initially Germany.
But the issue will be decided by qualified majority, meaning it needs the support of 15 out of the EU's 27 countries representing 65% of the bloc's population.
With the backing of the E6, which represent 70% of the EU's population, centralized supervision is now much more likely to happen.
"The fact that the EU's six largest economies are prepared to leave national self-interest behind and move forward together is an important signal for the entire European Union," German Finance Minister Lars Klingbeil said in a statement.
ACCOUNTABILITY MUST BE ENFORCED
The European Commission presented its plan to better integrate EU capital markets in December, and Germany's finance minister has said he expects the package to be adopted by the end of this year.
"In an uncertain international context, Europe needs deeper and more integrated capital markets," Spanish Finance Minister Carlos Cuerpo said. "This joint positioning is a decisive step towards a true savings and investment union."
ESMA's governance structure must be set up efficiently: expertise, supervisory and market experience, and geographical balance should play a decisive role, the ministers agreed in a paper seen by Reuters on Friday.
In addition, costs must be kept under control and accountability must be enforced, the joint paper said about the ESMA.
However, the paper said that in their current form and size, German trading venues would currently not be subject to mandatory European supervision authorities over trading in crypto-assets, and to reduce barriers to cross-border funds to help company financing, according to the paper.
