Study recommends financial warning council

BRUSSELS, Feb. 25 (UPI) -- A study in Europe concludes the financial firms on the continent should develop a watchdog group to warn of undue risks that could upend financial stability.

The study group, headed by Jacques de Larosiere, a former managing director of the International Monetary Fund, recommended European authorities create a European Systemic Risk Council, the Financial Times reported Wednesday.

The study envisions a council led by the European Central Bank but staffed by central bank officials and regulators from various countries in the European Union's 27 member states.

The study also recommended creation of a European System of Financial Supervisors, which would allow for internationally coordinated bank regulations, the Financial Times said.

The second group could be comprised of three regulatory branches, covering banking, insurance and securities.

Such a group could also handle licensing and oversight of international services, such as credit rating agencies.

"We need to ensure that the level three committees are given some authority, some limited powers," de Larosiere told the Financial Times.

Asked why the study group didn't recommend a single EU regulator -- in effect a "super-regulator," de Larosiere said, "we might have been accused of being unrealistic."