Through its membership in numerous European bodies and institutions, the Czech National Bank as a financial market supervisor helps to shape the single European financial services market. Moreover, the Czech National Bank is actively involved in the activities of international organisations. This gives it a say in the creation of international standards for the regulation and supervision of the financial market.
At the European level, the CNB is involved in the three European financial market supervisory authorities established on 1 January 2011, namely the ESMA (capital market regulation), the EBA (regulation of banks) and the EIOPA (regulation of insurance companies and occupational pension funds), as well as the ESRB (macro-prudential policy relating mainly to systemic risks). At the international level, it is involved in the IOSCO (capital markets), the IAIS (insurance industry) and the IOPS (pension schemes). Last but not least, the Czech National Bank is actively involved in the work of the Basel Committee on Banking Supervision.
Transformation of supervision
With effect from 1 January 2011, three new European authorities for financial market supervision were created by transformation of Lamfalussy Level 3 committees (CESR, CEBS and CEIOPS – the "3L3 committees"). The European Supervisory Authorities (ESAs), which are the legal successors of the 3L3 committees and which will deal with regulation and partly with financial market supervision, have legal personality to the full extent stipulated by the national legislation for legal entities in the location where they have their registered office. In addition to the ESAs, the European Systemic Risk Board (ESRB) was established on 1 January 2011. It is responsible for macro-prudential supervision of the financial system in the EU.
The new institutional set-up for EU regulation and supervision is based on the recommendations of a group of experts led by Jacques de Larosière, which, in the wake of the financial crisis, was tasked by the European Commission in November 2008 to submit proposals aimed at strengthening supervisory requirements in order to improve the protection of the public and to restore confidence in the financial system.
The declared objective of the ESAs is to protect the public interest by contributing to the stability and effectiveness of the financial system, for the EU economy, its citizens and businesses. The ESAs should also contribute to improving the functioning, integrity and transparency of the internal market by ensuring a consistent, efficient and effective level of financial market regulation and supervision. Consistent application of regulation should prevent regulatory arbitrage and promote equal conditions of competition. To achieve these objectives, the ESAs should foster supervisory convergence and strengthened coordination at the European and international levels and apply the powers conferred upon them.
Unlike the 3L3 committees, which were established by decisions of the European Commission, the ESAs are established by regulations of the European Parliament and the Council. Such regulations are more detailed than Commission decisions and stipulate a wider range of activities and competencies for the ESAs compared to the 3L3 committees.