The president of the European Parliament, Jerzy Buzek, and Belgium's State Secretary for European Affairs, Olivier Chastel, have formally signed into law the financial supervision package, which will establish new authorities oversee the operation of banks, securities markets and insurance companies, as well as monitoring the build up of risk in the economic system as a whole.

According to a statement by the European Parliament, the new watchdogs are set to be operational by 2011 and will have tough new powers to settle disputes among national financial supervisors, to ban risky financial products and activities, and to directly supervise credit rating agencies.

If national supervisors fail to act, then the authorities may also impose decisions directly on financial institutions, such as banks, so as to remedy breaches of EU law.

Buzek said this legislative package is one of the key cornerstones in rebuilding economic growth in the EU.

"The new and strengthened financial supervisory authorities will help to ensure that we avoid deep financial crises in the future. It is now essential to make fast progress towards a strong economic governance model for the Eurozone which is needed to effectively respond to market tensions," Buzek said.