Introduction

From the early development of the single market programme, the principle of ‘home country’ control was intended to operate as one of the three pillars of the single European market in financial services. More specifically, the harmonization of substantive rules on such matters as initial authorization, prudential supervision and internal organization of banks and other credit institutions was thought to offer a strong basis of mutual recognition of national laws and the attribution of the primary task of supervising the internationally active financial institution to the competent authorities of the Member State of its origin (‘home country’ control). It was also implicit that the authorities of the country of destination of financial services, while not deprived of all power, would assume a complementary role.

The fourth and last part of the book will examine the extent to which cross-border electronic banking activities in the single European market are subject to the legal and supervisory control of the ‘home country’ of the bank and whether Member States in their capacity as recipient countries may impose their own legal requirements to online services originating in another EU state. This chapter will outline the normative content of the principle of ‘home country’ control of the Banking Consolidation Directive and how this institutional arrangement influences the allocation of legislative and supervisory jurisdiction for prudential matters between the ‘home’ and ‘host’ state in the case of cross-border banking services.