The European System of Financial Supervision from an EEA Perspective – A Complex Compromise

Abstract

The global financial crisis in 2007 and 2008 revealed many flaws in European financial markets – including the financial supervisory system. In accordance with the recommendations made in the de Larosière Report, the Commission proposed to set up a European System of Financial Supervision (ESFS). On 24 November 2010, the new system was established. For Iceland and the other EFTA states that form the internal market along with EU Member States through the EEA Agreement, this new system posed some problems. The system did not quite fit into the so-called two-pillar structure of the EEA agreement, which did not envisage such transfer of powers to ‘supranational’ bodies in the same way as the EU Member States. It was, therefore, necessary to adapt the new system to the EEA two-pillar structure, which meant a more complex system for the EEA EFTA states. The aim of this article is to clarify how the new European System of Financial Supervision has been incorporated into the EEA agreement and to describe how the supervisory structure has developed throughout the years from an EEA EFTA state´s perspective.

Keywords: EU law, EEA law, EU securities regulation, financial market law, capital market law, financial regulation, financial supervision

JEL Classification: K22