Large banking groups have been created from a growing number of cross-border bank mergers. Today, many banking groups have major operations in multiple jurisdictions, where they can pose systemic risk to a host banking system. At the same time, over the last decade, EU legislation has been growing dramatically in scope and coverage for many areas and segments of financial markets.
However, the implementation and enforcement of this legislation has been ultimately left to the discretion and authority of supervisors in the individual Member States, based on the principle of home country control and mutual recognition. The recent financial crisis has clearly illustrated these substantial cross-border implications and the need for a more robust macro-prudential supervisory framework and micro-prudential supervisory regime.