Martin Mansergh (Tipperary South, Fianna Fail)

-----than those that suggest the problem is all the fault of the Taoiseach, now or when he was Minister for Finance. We need to grow up in this House. The people need more than crude politicisation.

I thank Members for their considered and useful contributions, except the point made by Deputy Durkan to which I referred. The tone of the rest of the debate was absolutely sensible and I had no problem with the points being made. I thank the Joint Committee on European Scrutiny and the other Oireachtas committees for their role in the process. When dealing with EU frameworks, one very often needs more than one committee. I will respond to as many of the Deputies' points as possible in the time available to me.

These proposals aim to put in place an EU supervisory structure for financial services which is significantly enhanced to meet the challenges of effectively regulating and maintaining the stability of the single market in financial services in the EU.

The legislative proposals aim to create a strong, robust and more uniform EU-wide system of financial supervision and oversight by developing a single rulebook for financial regulation and by securing better co-operation between national supervisors in the supervision of large and complex cross-border financial groups.

The establishment of a European systemic risk board, ESRB, combined with three new European supervisory authorities, will address what has been identified as a major priority in the strengthening of financial regulation internationally. It will ensure a strong focus on the stability of the overall financial system alongside closely monitoring the soundness of individual financial institutions as well as a more co-ordinated approach to the day-to-day supervision of financial institutions, particularly by the creation of a single rulebook. It is also in line with several international initiatives including the creation of a financial stability board by the G20.

The heads of the European Central Bank, national central banks and the European supervisory authorities, as well as national regulatory bodies, will participate in the European systemic risk board. To achieve its role, the ESRB will have the power to issue non-binding recommendations and warnings to member states, including the national supervisors and to the European supervisory authorities, the response to which will be closely scrutinised by a complain-or-explain mechanism.

With regard to the proposed European system of financial supervisors, ESFS, the three new European supervisory authorities for the banking, investment services and insurance and pensions sectors will take over all of the functions of the three existing EU committees of national supervisors for banking, securities and insurance which have advisory powers and aim to foster supervisory convergence, best practice and the convergence of regulatory outcomes.

It is proposed that the new authorities will have significant additional competences including resolving cases of disagreement between national supervisors where legislation requires them to co-operate or to agree; contributing to ensuring consistent application of technical Community rules through, for example, peer reviews; developing proposals for binding technical standards; and a co-ordination role in emergency situations

These issues have been the subject of much debate for the past 12 months since the publication of the de Larosière report. The views of stakeholders both at national and European level have been taken into account. The meeting of the Joint Committee on European Scrutiny in December was the third occasion on which an Oireachtas committee considered this issue.

The committee's report was published earlier this month and provided a valuable contribution to the debate. It strongly supported the broad thrust of the EU proposals recognising the need for a step-change in the capacity of the current nationally based supervisory systems to work in concert to address threats to financial stability in the EU which in the operation of the single financial market often cannot be contained within national borders.

The proposed reforms to regulatory structures outlined here today are not to be regarded as the full extent of the EU's response to the crisis. At sectorial level, several other issues have been addressed, while others are in the pipeline. A new regulatory regime for credit rating agencies has been agreed and will come into operation later this year. Shortcomings in how the regime operated have been clear in the past several years. Capital requirements for banks and investment firms have been agreed and further proposals can be expected. The Commission has proposed measures to regulate the managers of hedge funds and other alternative investment funds. These proposals are being examined by working groups in Council and the European Parliament. Further work is also taking place on insurance solvency provisions. The Commission is examining the way in which derivative contracts are traded and legislative proposals can be expected later this year.

It is widely accepted that these reforms are necessary and urgent and they have received support from a wide range of interested parties. The Government regards them as important measures which will help to restore confidence in the EU's financial systems. The proposals are in line with G20 developments. It is appropriate that the reforms be implemented as a priority and the Commission's target for the new bodies to be operational at the start of 2011 is appropriate.

I thank Members for their comments on this important and urgent issue. Financial institutions and investors alike know that these reforms are coming down the track and they want to see them implemented. These reforms are a crucial step in addressing the weaknesses identified in the supervisory framework of financial regulation in the EU and the Government is fully behind them. I have sympathy with Deputy Costello's comments on discussing and scrutinising legislation, regulations and statutory instruments. This debate highlights the complex measures required nationally and at European level in this area. The causes that have given rise to this legislation and the solutions are quite complex and interconnected. They are not simple matters as they are sometimes represented.

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