Brussels - The European Union's top official on Wednesday challenged member states to set up an EU-wide system for overseeing its financial markets at once, rather than waiting three years as originally proposed.

A report published last week by former International Monetary Fund chief Jacques de Larosiere called for the creation of such a system after three years' trial, but "we say this should be done immediately," European Commission chief Jose Manuel Barroso said.

De Larosiere's report called on EU governments to create three supranational authorities to oversee the bloc's financial markets in a bid to make Europe's banking system proof against future crashes.

The authorities in question would be tasked with strengthening cooperation between national regulators in the EU's 27 member states and with analysing their reports to provide early warning of future problems such as the collapse of the market for poorly-secured "sub-prime" mortgages in the US, which sparked the current crisis.

Barroso said that the commission would draft a law setting up such bodies by the end of May. The Brussels-based executive is due to propose laws on regulating hedge funds, private equity and executive pay in early April.

EU member states would have to approve any such laws before the proposed authorities could begin work. (dpa)