The president of the European Commission on Wednesday called for an overhaul of the EU's financial supervisory system.

The measures we have taken to tackle the crisis are starting to work but…the real economy also needs ethical and effective financial markets if it is prosper, the Commission president Jose Manuel Barroso told a news conference.

Our measures will help establish confidence and restore demand for credit, he said.

The European Union proposed Wednesday creating regulatory bodies to oversee financial supervision across national borders to protect investors and prevent another global credit crunch.

Barroso said that clear support from EU leaders at their summit on 18-19 June would avoid the proposal being watered down by corporatist interests.

If we cannot reform the financial sector when we have a real crisis, when will we have reform? he asked at a conference in Brussels.

A steering group would be created to oversee three new pan-EU authorities on insurance, banking and securities markets and ensure EU rules are applied consistently across the region.

Barroso made clear the EU needed to act now, before the EU emerges from crisis and pressure for an overhaul eases. There's no room for more delays ... We only have one chance to get this right, he said.