The European Union's financial watchdog should coordinate oversight of the bloc's biggest asset managers, such as BlackRock and Amundi, to eliminate potential "blind spots" in national supervision, European Central Bank economists said on Friday. The call, made in a blog post, is part of a broader push by the ECB to foster more integrated European capital markets that can finance economic growth in the EU and help it compete with the United States and China. Make sense of the latest ESG trends affecting companies and governments with the Reuters Sustainable Switch newsletter. Sign up here. Advertisement · Scroll to continue
Under the proposal, the European Securities and Markets Authority (ESMA) would be tasked with coordinating colleges of national supervisors overseeing the 10 or 15 largest asset managers, which manage 6.3 trillion euros ($7.48 trillion). "A more European supervisory framework would ultimately strengthen the sector’s resilience, helping to preserve credit and liquidity flows to the economy during periods of financial stress," said the blog, which the ECB says does not necessarily reflect its official view. Such supervisory colleges already exist for some asset managers to exchange information and practices on a voluntary basis. Created after the global financial crisis, ESMA has so far mostly supervised clearing houses and ratings agencies, and acted as a standard setter.
While the ECB has long pushed for EU‑wide oversight of funds, it has repeatedly run up against resistance from national authorities reluctant to cede control over sensitive markets such as government bonds and shares in companies seen as national champions. Strong ties to banks, concentration in Luxembourg and Ireland BLIND SPOTS The ECB blog said the size of this industry, its links to the banking sector and its concentration in just two jurisdictions -- finance-friendly Luxembourg and Ireland -- meant national supervisors risked missing potential big risks and spillovers. "Nationally fragmented oversight leaves room for supervisory blind spots that could be addressed through integrated supervision," the blog's authors, including ECB experts Ana Maria Ceh and Pierce Daly, said. European funds' assets almost doubled over the past decade to more than 20 trillion euros ($23.76 trillion), as they moved into business that banks abandoned due to tighter regulation in the wake of the global financial crisis.
