EU Reaches Deal on Financial Market Regulation

European Union finance ministers on Wednesday reached a compromise on a new supervisory framework for the bloc's financial markets, The Wall Street Journal reported. Under the plan agreed by the ministers, the EU will create two new supervisory groups for financial markets: a "macro-prudential" body to study big-picture risks to stability and three "micro-prudential" groups to look at specific issues in the banking, securities, and insurance and pension sectors. The U.K., home to the EU's largest financial center, was worried about ceding control over the City of London to a powerful new EU committee. It also wanted to ensure its taxpayers wouldn't be forced to fund bailouts for banks operating across the bloc's borders or spend money on other measures. EU diplomats say the U.K., after five hours of talks and lengthy negotiations about the precise wording of the deal, was satisfied that the new regulatory groups wouldn't be too powerful. The three EU groups supervising the regulation of specific industries will be responsible for harmonizing the rules and methods applied by national authorities. They will also have the authority to resolve disagreements between countries and to coordinate action in a crisis, albeit with certain limits. Read more. (Subscription required.)