LONDON, Dec 16 (Reuters) - Bank of England Governor Mervyn King was elected first vice chair of the new European Systemic Risk Board (ESRB) that came into force on Thursday in a move that may allay UK concerns of being overruled by Europe.
The anticipated news that King, who heads the central bank in the EU’s biggest financial centre, will have a key role at the ESRB will help meet criticisms that Britain was being sidelined by the bloc’s new supervisory framework.
The ESRB will monitor potential credit and asset bubbles across the 27-country bloc and recommend action before markets or economies become destabilised, plugging a macro-supervisory gap highlighted by the financial crisis.
The board, which will have no binding powers, is hosted by the European Central Bank in Frankfurt and will be chaired by ECB President Jean-Claude Trichet, as expected.
“The work of the ESRB will be important in ensuring the resilience of the European financial system and meeting the challenges that lie ahead,” King said in a statement.
The ESRB is part of a wider, sweeping reform of financial supervision in the EU.
Three new pan-EU supervisory authorities will be launched in January covering markets, banks and insurers and based in Paris, London and Frankfurt, respectively.
They will have powers to impose binding technical standards on member states and overrule a national regulator when an EU law is breached or in an emergency situation.
The financial industry is awash with talk of who will head the new authorities that will initially have a combined staff of 150 people and a budget of 40 million euros, rising to 300 staff after four years.
EU Internal Market Commissioner Michel Barnier said this week that there have been 300 applicants for the six new jobs -- chairs and secretary generals of the three new authorities.
The boards of each new authority will select the chair and secretary general, either by consensus or a majority vote, from a shortlist approved by the European Commission.
“We would expect the college of commissioners to adopt the final shortlist to submit to the European Parliament mid to late January,” a Commission official said.
The final selection will face confirmation hearings in parliament which will vote whether to approve or reject them.
In the meantime, the existing chairs or deputy chairs and secretary generals of the three committees which the authorities replace, will continue until around April when the new permanent officials should be in place, the official added.
National supervisory regimes are also being changed.
King will become one of the most powerful central bankers in the world when the Bank becomes the main regulator for Britain’s largest banks and insurers from 2012.
He also chairs a new Financial Policy Committee at the Bank that will have a similar task to the ESRB.
In Germany the ruling government coalition reached a deal on Thursday to reform the country’s banking supervision which will give the Bundesbank additional responsibilities. [ID:nLDE6BF1NS]
The ESRB will hold its first meeting on Jan. 20. (Additional reporting by David Milliken; Editing by Ruth Pitchford)