Chapter 9- Financial Services

Content of the Chapter

The acquis in the field of financial services (Chapter 9) includes rules for the authorisation, operation and supervision of financial institutions in the areas of banking, insurance, supplementary pensions, investment services and securities markets, in order to ensure the stability of and fair competition between financial institutions.

This chapter covers four main areas: banking and financial conglomerates, insurance and occupational pensions, financial markets infrastructure, securities markets and investment services. Also, the issues of protection of consumers of financial services are regulated, as well as the way of cooperation between the supervision bodies for the financial market. European policy in the field of financial services aims to ensure a high level of stability, security and efficiency of the financial system, as well as adequate protection of consumers and investors.

After the global financial crisis of 2008, the EU financial services acquis has passed through a comprehensive transformation process. In order to achieve a more stable and effective financial system in the EU, it is aimed to establish a banking union and a capital markets union. In this period, the issues with potential systemic risk such as investment/hedge funds, derivatives, credit rating agencies, payment and settlement systems have become the focus of the EU reform agenda. 

For a stronger and stronger banking sector, a consensus was reached in 2012 on the creation of a Banking Union, which includes a common supervision and a resolution mechanisms for the banks in the Euro Area. The Banking Union, which ensures the consistent application of EU banking rules and establishes a more transparent, integrated and secure market for banks, includes the Single Supervision Mechanism (SSM) and Single Resolution Mechanism (SRM), which is mandatory for Euro Area countries and voluntary for other EU countries.  Within the scope of SSM, which became functional in November 2014, the European Central Bank (ECB) assumed the role of supervision for all banks in the Euro Area. SRM, which has become functional in January 2016, will facilitate the management of the resolution process in case a bank has a risk of bankruptcy. SRM consists of a Single Resolution Board and a Single Resolution Fund. In the current system, the decision on whether the conditions that will lead to the liquidation of a bank (bankruptcy risk) are evaluated by the ECB, while the resolution is managed by the Single Resolution Board.

In addition to the Banking Union, the "Action Plan for the Establishment of a Capital Markets Union" was adopted by the Commission on 30 September 2015 in order to establish a deeper and more developed capital market in the EU with an aim to provide necessary financing for the growth of the EU economy and to reduce the dependence of the economy on banks. This plan has been largely completed and the new Capital Markets Union (SPB) Action Plan, consisting of 16 actions, has been adopted on September 24, 2020. The Action Plan, which aims to develop market-based finance to ensure recovery and long-term growth of the EU economy and finance the green and digital transformation, will also play an important role in overcoming the Covid-19 crisis.

Sustainable Finance

In order to achieve the green and digital transformation objectives of the European Green Deal announced in December 2019, the need for sustainable finance instruments such as "green bonds" has increased significantly. “Green Bonds” is the leading investment/saving instrument that contributes to the fight against climate change and to achieve environmental objectives. The EU has developed a classification system called “green taxonomy” to help companies identify which economic activities are environmentally sustainable with the aim of developing and increasing the efficiency of the green bond market. In this context, the EU Taxonomy Regulation was published in the EU Official Journal dated 22 June 2020 and entered into force on 12 July 2020.

Within the framework of the Green Deal, the EU announced a renewed sustainable finance strategy. The Commission published its “Strategy for Financing the Transition to a Sustainable Economy” on 6 July 2021. It aims to re-orient investments towards more sustainable technologies and businesses, thus supporting achievement of climate and environmental targets. The Strategy includes six sets of actions:

1. Extend the existing sustainable finance toolbox to facilitate access to transition finance
2. Improve the inclusiveness of SMEs and consumers, by giving them the right tools and incentives to access transition finance.
3. Enhance the resilience of the economic and financial system to sustainability risks
4. Increase the contribution of the financial sector to sustainability
5. Ensure the integrity of the EU financial system and monitor its orderly transition to sustainability
6. Develop international sustainable finance initiatives and standards, and support EU partner countries.

Considering the cost of the green transformation process envisaged in the Green Deal and EU's international commitments on climate change, the need for innovative sustainable financing instruments, in particular green bonds, has further increased. In this context, the EU has established a Green Bond Standard (EU Green Bond Standard) to enhance the efficiency, transparency and credibility of the green bond market and to encourage market participants to issue and invest in European green bonds.

Current Stage of the Negotiations

The explanatory meeting was held on 29-30 March 2006 and screening meeting was held on 2-3 May 2006. the screening report was prepared by the Commission on 17 April 2007. It is stated in the screening report that Türkiye is sufficiently aligned with EU legislation in the scope of this chapter. Banking sector and capital markets are found substantially aligned with EU legislation while it is highlighted that some efforts are needed in the insurance sector.

Financial Services Chapter is one of the eight chapters that are blocked due to Additional Protocol. In the term presidency letter of 25 June 2007, no additional technical criterion was set. 

In the regular Country Reports prepared by the European Commisision, it is stated that Türkiye has a good level of preparation in the area of financial services.

Relevant Subcommittee Meetings

Sub-Committee No. 4 on Economic and Monetary Issues, Movement of Capital and Statistics.

Screening Process

Presentations-Explanatory Screening Meeting (29-30 Mart 2006)

Presentations-Bilateral Screening Meeting (2-3 Mayıs 2006) 

Screening Report 

Useful Links

European Commission DG FISMA website:

https://ec.europa.eu/info/departments/financial-stability-financial-services-and-capital-markets-union_en

EU’s financial services legislation 

https://finance.ec.europa.eu/regulation-and-supervision/financial-services-legislation/overview-financial-services-legislation_en 

For detailed information on EU Banking Union 

https://ec.europa.eu/info/business-economy-euro/banking-and-finance/banking-union_en

For detailed information on Capital Markets Union

https://ec.europa.eu/info/business-economy-euro/growth-and-investment/capital-markets-union/what-capital-markets-union_en