Is financial supervision successful enough in Europe?

In recent years there has been an increasing concern with the fragility of the international financial system such as the stock market crash in October 1987 and the recent collapse of the real estate. Therefore, the financial stability framework plays a significant role in the economic environment. Mishkin, with the asymmetric information analysis, puts forward a lender of last resort role (LOLR) should be essential. The analysis denominates to deal with financial crisis. With regard to the past experiences, central banks can take the responsibility of the LOLR role to prevent financial crisis. Besides, when the financial crisis is widespread, cooperation among central banks shall become crucial in order to stop it from spreading from one country to another. The closer cooperation among regulatory authorities and standardization of regulatory requirements ensure the more appropriate regulation. In the first place, understanding causes of the financial crisis is necessary in case of a repetition of the financial crisis. The common belief on the reasons of a financial crisis is global macro-economic imbalances and financial innovation together with failures in regulation, supervision and corporate governance. In this regard, the ECB, national central banks and supervisory authorities at EU level take an important place whether there is a micro- or macro-prudential supervision. Some alternative approaches have been evaluated for supervision in the European financial system as well. Neither separate institutions nor the integrated ones are not the key points in dealing with the financial crisis. This study focuses explicitly on the importance of the cooperation, coordination and information sharing.