European Union finance ministers are on the verge of a deal to set up new super-watchdogs to police banks following the economic crisis, Swedish Anders Borg Finance Minister said on Wednesday.
The 27-country EU wants to establish three pan-European watchdogs to keep tabs on banks, insurers and trading exchanges as well as creating a Frankfurt-based agency to watch for bigger systemic risks to the economy.
The bloc's finance ministers hoped to agree at talks in Brussels chaired by Sweden, holder of the EU presidency, on how much power to give the new authorities.
"It would be pretty embarrassing if you had a crisis of this dimension and you are not able to take a decision," Borg told reporters. "We are getting close. I expect we will take a decision today."
His optimism was echoed by Luxembourg's finance minister, Luc Frieden, who said: "I think that we are very close to a deal."
On banks, the ministers are to examine an EU blueprint that would create a London-based body to be the ultimate arbiter in the region and which would tackle problems that it judges national watchdogs have ignored.
But this attempt to shake up the policing of financial services has divided opinion among the bloc's bigger countries. They have been in talks since late September about how to reshape a law drafted by the European Commission, the EU's executive.
France favours giving the new authorities wide-ranging powers. Germany and Britain fear doing so could create super-regulators that would overrule governments and order lenders and others what to do.
Britain, home to Europe's financial capital, London, has mounted the stiffest opposition. It wants to water down proposed powers, leaving the new watchdogs mainly to draft and police pan-European standards for regulation.
In a letter published in the Times newspaper on Wednesday, British finance minister Alistair Darling warned against giving the new supervisors too much influence, by allowing them, for example, to govern individual companies.
"We must resist measures, however superficially alluring, that could undermine the effective functioning of our cherished single market," he writes.
"National supervisors, such as the FSA (Financial Services Authority), must remain responsible for supervising individual companies. Making companies directly accountable to more than one authority is a recipe for confusion."
If ministers disband on Wednesday without a deal, as happened in October, EU leaders will continue discussions at a summit next week.
The European Parliament has an equal say in finalising the law, which could see the watchdogs up and running by the end of 2010.
