The Commission says the reforms will pave the way for further financial integration and a full Capital Markets Union, to promote jobs, growth and investments in Europe.

The proposals also include steps to foster the development of financial technologies and to make sure that sustainability considerations are systematically taken into account in supervisory practices at the European level.

The measures follow a public consultation undertaken by the Commission between March and June this year which sought feedback on the impact of new technology developments on the financial service sector and which received 266 responses from stakeholders.

Valdis Dombrovskis, vice president for Financial Stability, Financial Services and Capital Markets Union says: "Financial markets are changing fast. We are seeing renewed cross-border integration, new opportunities in fintech and a boom in sustainable and green finance. The EU needs to act as one player so that we can stay ahead of the curve. More integrated financial supervision will make the Economic and Monetary Union more resilient. These pragmatic proposals will also make it easier for our companies to operate cross-border and build consumer trust."

He says the proposals will improve the mandates, governance and funding of the the three European Supervisory Authorities (ESAs)in banking (EBA), securities and financial markets (Esma), and for insurance and pensions (European Insurance and Occupational Pensions Authority, EIOPA).

As part of the shake up, the ESAs will be tasked with prioritising fintech and coordinating national initiatives to promote innovation and strengthen cybersecurity.

"They will take account of technological innovation in all the tasks they perform," says the Commission.

In particular, the ESAs will be tasked with coordinating national technological innovation instruments and tools - such as innovation hubs or ‘sandboxes' - set up by national supervisors.

"As financial services become more technology and data dependent, regulators and supervisors must be familiar with these technologies and be able to accommodate them," states the Commission. "As part of the Capital Markets Union, the Commission is working on a comprehensive strategy setting out what detailed actions must be taken to address these challenges and allow for an integrated market for digital financial services without constraints to economies of scale and scope."

A full action plan to deal with fintech-related issues is expected to be unveiled early next year.