Fit for Purpose or Drowning in Details? Institutional Evolution of the European Financial Sector Supervisory Authorities a Decade After the Global Financial Crisis

The de Larosière reform package of 2009 officially established the three European financial sector supervisory authorities (ESAs), namely, the European Banking Authority (EBA), the European Securities and Market Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA). Fully operational since January 2011, the three ESAs have been developing and enforcing the single supervision rule books in their respective sectors and issuing binding decisions to ensure greater regulatory consistency. Furthermore, since the 2008 global financial crisis and the subsequent Eurozone crisis, there have been several waves of new EU legislation in banking, securities and insurance, which have further expanded the powers, responsibilities and tasks of the three ESAs. Important revised and new legislation includes: the revised Capital Requirements Directive IV (CRD IV) and the recent Capital Requirements Regulation (CRR) in banking; the revised Markets in Financial Instruments Directive II (MiFID II), the recent Markets in Financial Instruments Regulation (MiFIR) and European Market Infrastructure Regulation (EMIR) in securities; and the revised Solvency II Directive in insurance. This chapter examines the institutional evolution of the three ESAs and how their roles have changed as a consequence of the global financial crisis and the Eurozone sovereign debt crisis.