The European Parliament believes business and finance needs to be regulated across Europe rather than on a country-by-country basis.
In an overwhelming vote Thursday, the European Parliament recommended creating a regulatory body similar to the Securities and Exchange Commission in the U.S., the Wall Street Journal reported. The way it works now, individual European countries write laws and implement them, but in light of the massive accounting scandal centering on Parmalat, the fallen Italian food giant, Parliament recommended a new course of action.
The resolution is mostly symbolic, analysts say. The E.U. Commission must propose it next, followed by approval of European governments, but they have been reluctant to give up their own national authorities.
"This goes beyond parliament's powers," said Mattias Levin, research fellow at the Center for European Policy Studies. "We're not going to see an immediate centralization of supervisory powers into an E.U. body."
Change may not be immediate, but even the author of Europe’s existing financial legislation predicted that a centralized SEC-style body will come in the near future. "We will end up with a single regulator over time," said Alexandre Lamfalussy.
Parliament also voted Thursday to recommend stringent new accounting rules. The accounting industry has embraced most of the measures, except for a proposal to force companies to rotate audit firms or partners every five years.
"Firm rotation will reduce quality over time," said Jeremy Jennings, global director for regulatory and government relations for Ernst&Young. "But in general, we support many of these rules."