Germany shifts on EU oversight of financial services

Germany’s finance minister signalled a major shift toward supporting centralised EU supervision of financial services, backing transfers of oversight from national regulator BaFin to ESMA for large cross-border exchanges, central counterparties, depositories and crypto venues. The move — coordinated with France, Italy, Spain, the Netherlands and Poland — could unlock progress on the EU capital markets union, increase regulatory harmonisation and reduce fragmentation that has deterred pan‑EU listings and cross‑border capital flows. Markets could see firmer regulatory clarity for cross‑border market infrastructures and crypto platforms, potentially benefiting pan‑European exchanges, clearinghouses and financial groups while creating transitional risks for national regulators and for financial hubs (eg Ireland, Luxembourg). Ministers are discussing a transition timeline and aim to secure approval from EU governments and the European Parliament this year, a development that would heighten prospects for deeper European capital market integration.