ECB as supervisor?
It still needs to be decided where the new supervisory authority would be based but the majority of ministers backed a proposal to hand the task to the European Central Bank (ECB) in Frankfurt.
German ECB board member Jörg Asmussen confirmed that the bank was ready and willing to do the job – but many details still need to be sorted out. To avoid possible conflicts of interest, there would for instance need to be a strict separation between the current task of the ECB and its future supervisory function. If the supervisor decided to wind down a certain bank, for instance, the ECB would be faced with losses because of the loans it might have given to the bank in question.
There’s also a discussion over who should be on the board of the supervisory institution: national representatives from each eurozone country, or a small flexible team? And there also is the question of how to supervise the supervisors: In a resolution passed this week, members of the European Parliament urged for democratic control mechanisms and said they expected to be involved in setting up the bank supervision.
Should the MEPs indeed insist on that, delegates in Nicosia admitted that it would be unrealistic to stick to the January 1 timeframe.
‘Fundamental problems’
Yet governments whose country’s banks are facing massive problems have been pushing for a speedy process. They know that banks can directly apply for help from the rescue fund ESM, as soon as the European bank supervisor is operational. The debate is now whether ailing banks will have to be bailed out first before being placed under European supervision. Should that not be the case, the cost of the bailout would have to be shared by all eurozone countries.
Another hurdle is that the European banking union has to be adopted by all 27 EU member countries – and not just by the 17 eurzone states sharing the single currency. But Swedish Finance Minister Anders Borg in Nicosea warned there were “fundamental problems” in the whole project.
Sweden doesn’t see why the European Central Bank – supposedly the guardian of the euro – should become the supervisor for Swedish banks that run their business in Swedish krona. Great Britain and Poland are also deeply concerned. In the end, German Finance Minister Wolfgang Schäuble had this summary to offer: “There’s still a lot of work ahead of us. But there’s no doubt about the goal of finding a common solution.”
