In this regard, the debate among observers has focused on the question, which measures the ECB were to take under these circumstances. As explained – and demonstrated – in the past, the ECB is in a position to adopt a wide range of instruments to ensure price stability, in line with the extensive instrument independence it has been granted under the Treaties.
The recently enacted law provides that, when specialized functional regulators already oversee the new permissible activities, duplication of supervision, and hence excessive regulatory burden, should be avoided. In addition, because market discipline operates more effectively in connection with nonbank activities not subject to the moral hazard of the safety net, regulators should try to avoid diminishing market discipline in the new financial holding companies.