How has prudential supervision to be

conceived and organized for an

emerging single financial market ?

This is the concern of the present

book which consists in a report

prepared by an international group of

experts chaired by Professor Jean-Victor

Louis and working in the

framework of the ECU Institute, based

in Lyon.

What are the objectives of prudential

control ? Does the new situation deriving

from the Single Market directives

and the perspective of the Monetary

Union require to supplement and coordinate

the existing system of supervision

- a "patchwork of tradition" - in

the Member States ? What are the

possible orientations to recommend ?

In this book - which includes in a

second part reports on the organization

of prudential control in each of the

twelve Member States, before the

widening of the Union, and a report

on the United States - the authors

explain why they consider that the

application of the primary responsibility

for solvency questions of the

authorities of the Home Country of the

institutions, completed by a network

of (bilateral) co-operation between

authorities, is not possibly able to

guarantee the systemic stability which

is the main target of supervision, the

risks being increased by the

expansion of activities at continental

dimensions. They believe that some

measure of centralization is needed,

and therefore compatible with the

principle of subsidiarity. This centralization

is requested as far as legislation

and regulation are concerned but

direct responsibilities for the control of

larger banks can also be placed in

the hands of a central authority. The

Maastricht Treaty gives some limited

powers and provides for a possible

transfer of competences to the

European Central Bank. However, the

report which states the arguments in

favor and against concentration of

prudential supervision in the hands of

a central bank does not exclude the

possibility of creating a specialized

authority which could have a larger

horizontal competence (conglomerates,

securities, insurances) than a

central bank. It would be useful to

introduce in the treaty at the Intergovernmental

Conference of 1996, an

enabling clause which would provide

for the possible creation of such a

specialized authority which should

work hand in hand with the European

Central Bank.