In light of these and other lessons, a high-level group chaired by Jacques de Larosière recently made specific proposals on the structure for financial supervision in Europe. According to the De Larosière group, a European Systemic Risk Council should be set up to strengthen macro-prudential supervision. Likewise, the group recommends establishing a European System of Financial Supervisors to strengthen micro-prudential supervision.
To meet this goal, we need to overcome a host of challenges. First, on the society front, public awareness of emission reduction has to be raised. Second, on the market front, the carbon market has to play a greater role in price discovery. Only when carbon emission is priced in, can we achieve effective resources allocation.