Publication

The unfolding crisis in Europe's financial markets is presenting the EU's new regulatory and supervisory set-up with its first big test, revealing worrying differences in responses to stress, flaws in the enforcement of rules and gaps in the supervisory framework. Although the evidence is limited so far, some clear-cut policy recommendations can be made, which need to be urgently addressed. Concerted action is needed involving monetary policy authorities, policy-makers and supervisors to agree on a set of policy priorities and to prepare a more integrated response to crises. The reputation of Europe's financial market is at stake.