The reform of the financial supervisory systems of the EU and the US with a focus on the crisis of 2007-2008

The magnitude of the financial crisis, which begun in the U.S. in 2007-2008, revealed gaps in the supervisory system that were amplified in the increasingly integrated financial markets. Liberalisation of capital flows, which created space for functioning of international financial institutions of systemic importance, increased fragility of singular economies to anomalies occurring in other regions and facilitated transition of the crisis. At the same time, the ineptness of the supervisory mechanisms in handling systemic problems inherent in those realities was demonstrated. Confronting those challenges, the EU made a considerable effort to establish by 1 January 2011 the European System of Financial Supervision - a micro-and macroprudential system designed to facilitate coordination between national supervisors and enhance early warning capacities. In the United States, broad reforms were put into play by adoption of the Dodd-Frank Act. Given that effectiveness and cooperation require a convergence of standards and a similarity of institutional framework facilitates the task, the institutional analysis provided in the article enables a critical comparison of the reform efforts. It remains to be verified in practice, however, whether concerns about only the nominal "systemic" nature of the reform prove accurate.