The government approved through an ordinance the creation of the Financial Supervision Authority (FSA), which should oversee the insurance, stock exchange and private pension markets starting March 15 of next year.
The authority follows the model of other EU member states that unified the non-banking supervision authorities.
Out of the 27 EU members states, there are 15 with a single supervision authority, according to central bank governor Mugur Isarescu. He stated that in 11 states the supervision is unified in a separate entity like in Germany or the UK.
“This is the European trend. I think we have to follow the European path and not think of other innovations,” said the governor.
The government hopes the new authority will cut some of the bureaucratic practices in supervision and should become an anchor of stability. Following this move, Romania will have two institutions that manage the financial sector. The National Bank of Romania (NBR), which oversees the banking sector and the FSA.
The FSA will have 15 members and a smaller combined budget compared to the three existing authorities CNVM – stock exchange, CSA – insurance, CSSPP – private pensions.
“Romania needs to adapt its institutions, to make them more flexible and efficient in supervising the non-banking financial markets,” said PM Ponta.
The National Association of Insurance and Reinsurance Companies (UNSAR) said an extended debate is needed with the industry before setting up the FSA.
“The decision to unify the insurance, capital market and private pension markets – aside from the fact that it needs an ample debate with professional associations and companies that will be supervised – needs to have, ahead of all, a credible prudential and economical justification, balancing the advantages and disadvantages,” said Florentina Almajanu, general director, UNSAR.
The association said such an authority works in mature markets, where the common supervision includes the banking sector.