Answer given by Mr Barnier on behalf of the Commission
The Treaties on the European Union and on the Functioning of the European Union, that have been signed by all Member States, provide the foundations of the European Union. They confer certain powers on the Commission and sets out the legal framework in which the Commission operates.
Financial services are a significant part of the EU single market and free movement of capital is an essential condition for its proper functioning. It enables a better allocation of resources within the EU, facilitates trade across borders, favours worker mobility, and makes it easier for businesses to raise the money they need to start up and grow. Free movement of capital, as well as freedom of establishment and of provision of services, are also essential conditions for the cross-border activities of financial services companies.
The Commission's role, according to the Treaties, is mainly to achieve these objectives by proposing new EU legislation and to see to its proper transposition and implementation by the Member States. Adoption of legislation in the field of financial services is made in co-decision by all Member States in the Council (acting by qualified majority voting) and the Parliament.
The City of London is a very important part of the EU single market for financial services. A stable and sound financial sector is a prerequisite for building a sustainable recovery.
The current financial crisis has clearly highlighted weaknesses in the EU's supervisory framework, which remains fragmented along national lines despite the creation of a European single market more than a decade ago and the existence of pan European financial institutions.
Following extensive consultation, and endorsement by the European Council at the June 2009 EU Summit, the Commission has proposed legislative proposals to address those weaknesses both at the macro- and micro-prudential supervision level. These proposals are currently under negotiations by the co-legislators, the Parliament and the Council. The Commission is of the view that the adoption of these proposals, by establishing a comprehensive and solid regulatory and supervisory framework, will ultimately strengthen all financial centres in the EU.