The European Commission announced May 27 that it wants to create two new European Union institutions with the power to impose binding decisions on member states. Driven by Germany, the plans would create the European Systemic Risk Council (esrc) and the European System of Financial Supervisors (esfs).

The esfs would create a single body of rules for the EU. It would set the standard of regulation that the national financial authorities would have to follow, creating “binding technical standards in specific areas” as well as “interpretative guidelines which the component national authorities would apply.” It would intervene when the national authorities disagree on who regulates multinational banks, but it would leave day-to-day regulation to national authorities.

“While the proposals fall short of a pan-European regulator, they may have a similar effect,” writes Telegraph columnist Ambrose Evans-Pritchard. “The European Court of Justice is to have the final say over any appeal.”

“This is exactly what I feared would happen,” Ruth Lea, director of UK think tank Global Vision, said. “The EU is taking advantage of the crisis to extend its control over the British financial system. It is very threatening because it is almost impossible to repeal anything in the EU, however damaging it proves to be.”

The risk council’s more innocuous job is to analyze economic data in order to identify any area of potential trouble in the economic system. In theory, the body would spot potential crises—such as the subprime loans fiasco—before they break. The esrc would not have any power to enforce its recommendations; EU officials hope that pointing them out will be enough to make nations act.

Antonio Borges, chairman of the Hedge Funds Standards Board, warned that banking legislation has been hijacked by politicians who are now “out of control.”

“There is little intellectual foundation to what they are doing,” he said. “You would have thought that since 80 percent of Europe’s hedge funds are in Britain, and are already regulated, that the fsa [Britain’s Financial Services Authority] would have a big say [on hedge fund proposals], but the fsa was marginalized. The reality is that a great deal of regulatory power is going to Brussels.”

Germany is leading the drive to move power away from London and to Brussels. This new plan has not yet been approved by the European Parliament, but it shows the EU’s bold desire to closely regulate Europe’s financial system at Britain’s expense.

Although it may be hard to discern at first, there is a deliberate agenda behind Europe’s financial power grab. The German-dominated EU has plans to become the world’s major financial powerhouse, and that requires wresting control of the financial system from London and New York. For more information, see our article “Financial Regulation in Prophecy!”