Tuesday

19th Jun 2018

Ministers at odds on banking supervision

  • Troubled Spanish banks like Bankia would come under ECB supervision (Photo: Carlos Blanco)

Finance ministers on Tuesday (13 November) remained at odds over how to include non-euro countries in a planned banking supervision scheme for the eurozone, making a 1 January deadline increasingly unlikely.

Sweden led the charge against the plan tabled by the EU commission, which is aimed at setting up a new supervisory body within the European Central Bank and gradually extending its oversight on the 6,000 banks in the eurozone.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... our join as a group

At the core of the problem is how to include the euro "outs" in the supervisory scheme if they want to opt in, given that the governing council of the ECB is legally a eurozone-only body.

"Either the treaty is changed so that each member state is treated equally, or the supervisory body will have to be placed outside the ECB," Swedish finance minister Anders Borg told journalists after the meeting.

Treaty change is a taboo among EU decision makers, as it takes years to negotiate and can be rejected in national referendums.

The EU commission sought to reconcile the position of the 'outs' with the legal limitations of the ECB board by suggesting that most of the decisions would be rubber stamped anyway and that on the actual banking supervision panel - a new body to be set up within the ECB - all member states would be represented equally.

"But there are still concerns and we will work on them, hopefully still being able to meet the 1 January deadline," internal market commissioner Michel Barnier said in a press conference after the meeting. In any case, the new body would be set up gradually in 2013-2014, so that "quality" prevails over "speed", he said reflecting a long-standing German demand.

He also poured cold water on hopes that once the new body is set up, troubled banks in the eurozone would be able to tap the bailout fund. "That is a necessary, but not a sufficient condition," he said.

The idea of a centralised banking supervisor for the eurozone was a precondition for Germany to agree in June to the prospect of opening the bailout fund to troubled banks, as a measure to help Italy and Spain lower their borrowing costs.

But since the ECB then unleashed a more forceful plan of "unlimited" bond buying for any troubled euro country once it signs up to a reforms plan, Spanish and Italian borrowing costs decreased and the pressure to quickly agree a banking supervision scheme eased.

In addition, Germany now feels that the Barnier plan is "too French", according to one source, as it "delegates" powers to national supervisors. This means that if something is again covered up at national level - as was the case with Spanish regional banks - the ECB would not know in time.

Instead, Berlin would like to see real auditing powers, even if it means that the ECB would have to start with fewer, bigger banks.

Critics say that is just a way to deflect supervision from Germany's own small regional banks which also needed to be bailed out after the 2008 financial crisis.

ESM bank bailouts will not happen soon, says Schaeuble

German finance minister Wolfgang Schaeuble Monday reiterated that no bank recapitalisation could take place until the EU's planned banking union is up and running but admitted "Spain can't wait that long".

Greek bailout exit takes shape

At a meeting next week, eurozone finance ministers and the IMF are expected to agree on new cash, debt relief measures, and a monitoring mechanism to ensure that Greece can live without international aid for the first time since 2010.

Opinion

Eurozone needs institutional reform

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

Opinion

Europe could lose out in North Korean bonanza

South Korean businesses including Hyundai and Samsung are already scoping investment opportunities. Will North Korea become a 'new Vietnam' opportunity - or more like Myanmar, where slow Brussels policy-making meant EU exporters lost out.

News in Brief

  1. Report: Audi CEO arrested over Dieselgate
  2. EU-Australia trade talks kick off in Brussels next month
  3. France and Germany moving closer to eurozone reform
  4. Merkel to meet Conte to find migration compromise
  5. Seehofer gives Merkel time to strike EU migration deal
  6. Schroeder and Sarkozy appear with Putin at World Cup
  7. Tennis champ and 'EU diplomat' claims immunity
  8. Italy threatens to ditch EU-Canada free trade deal

Stakeholders' Highlights

  1. Macedonian Human Rights MovementMHRMI Launches Lawsuits Against Individuals and Countries Involved in Changing Macedonia's Name
  2. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  3. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  4. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  5. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  6. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  7. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  8. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  9. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  10. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  11. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  12. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs

Latest News

  1. Orban to EPP: turn 'Christian democratic' or face challenge
  2. Is EU retail sector equipped for 21st century?
  3. Tear gas bodes ill for Macedonia name deal
  4. EU asylum claims drop, Germany registers most
  5. EU summit: migrants get a 'vote' too
  6. Basque threat of 'second front' for independence
  7. Progressive regulation needed now for 21st century finance
  8. Greece and Merkel's fate top This WEEK

Join EUobserver

Support quality EU news

Join us