The European financial supervisory architecture is based on a sectoral model with separate authorities for banking, insurance, and securities and markets. New developments in the European financial sector make this sectoral structure increasingly out of date. To deal with these challenges, the EU should commit to a Twin Peaks model as a long-term vision for supervision. The first peak would conduct prudential supervision, focusing on the health and soundness of financial firms. As these financial firms have become increasingly interwoven, the vision of integrated cross-sector prudential supervision is increasingly compelling, even though legal obstacles suggest that this cannot be implemented at the European level in the near term. The second peak would be a strong markets and conduct-of-business supervisor. This supervisor would focus solely on the proper functioning of markets, and the fair treatment of consumers. This Twin Peaks model should guide Europe’s efforts to deal with current challenges.