European financial supervision – More supervision, less sovereignty (Part 1)

A harmonized European financial supervision should prevent future financial crises. However, the new regulatory limits the sovereignty of States. The financial crisis has shown that the banking supervision in Europe did not work. By inconsistent regulatory requirements, banks could easily infiltrate unpopular regulations. Such a systematic risks were obscured. This practice, the whole system has brought to the brink of the abyss. Without harmonized regulatory requirements, states have incentives to undercut each other in severity of banking supervision and attract the financial industry into his own country. This creates jobs and increases tax revenues. In addition, the sector gets into trouble anyway; the international community must put together the rescue packages.