This chapter discusses problems of harmonisation and regulation of the European Internal Financial Market. The argument is that the current division of powers between the EU and Member States is not achieving sufficient harmonisation to develop an internal market. The obstacles to the Internal Financial Market presented by national regulatory and supervisory regimes remain too high, and the EU minimum standards and mutual recognition regime has failed to lower these barriers sufficiently. There is a need for broader based regulatory and supervisory institutions, undertaking at a European level what cannot effectively be done at a national level, including providing a system for preventing and dealing with systemic crises and risks of such crises. The European Central Bank may develop a response to the latter, but the establishment of an EU financial market regulator is the better solution. The chapter also addresses some of the agency problems of the decision making process, and the crisis driven nature of regulatory refor
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