Designing a Financial Stability Architecture for a Regionally Integrated Financial Space : The European Experience - Useful for the Caribbean?

Any discussion on improving the existing arrangements for assessing and managing financial risks and in particular supervising the relevant institutions will also need to address the question on which institution should be responsible for which task and for which sector of the financial system, how these institutions should be organized and, if there are several, how they should interact with each other. Based on the example of the European Union, this paper shows the gradual change from a rather loose rather idealistic cooperative framework among entirely independent institutions, over the right to contribute to the functioning of policies set by others, on to the Single Supervisory Mechanism, a centralized structure in which - at least for the banking sector - the ECB takes on a rather powerful role of policy making, oversight and enforcement