Following the publication of Lord Turner's review of financial services regulation this week, some form of European financial services regulator is almost certainly on the way.
Historically, the merest suggestion that the City of London might succumb to European regulation has led to pre-emptive weeping for all the jobs that will be lost.
But regulatory experts say Turner's review contains nothing worrisome and that a European regulator would not necessarily be very horrible.
"The City is right to be wary of greater influence from Europe, but Turner envisages an EU wide institution that's rather similar to the set up we currently have," says Richard Everett, regulatory partner at the law firm Lawrence Graham.
On a European level, regulation currently involves three bodies:
- the Committee of European Securities Regulation (CESR)
- the Committee of European Banking Supervisors (CEBS)
- the Committee of European Insurance and Occupational Pension Supervisors (Ceiops).
"As I understand it, what Turner wants to do is to roll up the three existing bodies into a single body that both sets standards and oversees the way in which national regulators impose standards," says Jonathan McMahon, an ex-FSA supervisor who advises companies on regulation at London's Promontory Financial Group.
"In essence, the existing bodies have already been setting the regulatory standards for Europe," he adds.
Turner's recommendations regarding a European supervisory body are made in 'Box 2F' on page 103 of his review.
Euro-regulation phobics can take refuge in his assertion that the proposed European body should have -
No powers over national supervisors to change individual regulatory decisions, nor to prescribe detailed supervisory practice.
McMahon says it's quite feasible that the pan-European regulator could be based in the City. Given that the European Commission (based in Brussels) is currently responsible for ensuring that Europe-wide regulatory initiatives are implemented correctly, this may even be preferable to the status quo.