The European Systemic Risk board will be chaired by the head of the European Central Bank for the first five years.
The current ECB president is Jean-Claude Trichet, whose term ends in October 2011.
The European Union last night announced sweeping reforms of financial regulation across Europe proposing the creation of a European Systemic Risk board and three new watchdogs covering banking, insurance and securities markets.
European Parliament economic and monetary affairs committee member and Conservative MEP Vicky Ford says: “What we have agreed is that he will take the chair for the first five years, three years into that there is a review process, everybody says whether it is working or not, then it goes back to the Council of Ministers, they say whether it is working or not, then you take a decision as to what you do next”.
“We are still not out of the crisis yet, you need to get it up and running. From the practical point of view the right person to be the chair, who has got the expertise and the manpower to do it, is the head of the ECB.”
The MEP for the East of England says this is the “pragmatic” solution to a “sensitive issue, especially for countries outside the Eurozone”.
“You could have gone through a massively long argument about should he be there forever or whether it should always be the head of the ECB,” she says.
Ford adds: “Pre-crash you had the governor of the Bank of England saying he was concerned about levels of debt but because it was only a UK view it was being listened to enough. This gives a loud hailer system to national regulators.”