MEPs support banking union, demand say on supervisory board
By Benjamin Fox
MEPs are demanding a say in deciding the chairman and members of a new bank supervisory board as part of their terms for supporting the EU's banking union.
Following a vote of the European Parliament's powerful economic and monetary affairs committee on Thursday (29 November), MEPs adopted a position giving them a veto over the nominee for vice-chairman, alongside a right of investigation for the parliament.
Dear EUobserver reader
Subscribe now for unrestricted access to EUobserver.
Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.
- Unlimited access on desktop and mobile
- All premium articles, analysis, commentary and investigations
- EUobserver archives
EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.
♡ We value your support.
If you already have an account click here to login.
The legislation would set up the Frankfurt-based European Central Bank (ECB) as the supervisor of the EU's 6,000-company-strong banking sector and revise the role of the European Banking Authority (EBA), one of the three financial sector supervision bodies set up in 2010.
The committee proposal is to give the EBA more powers to carry out stress tests and investigations. It would also move the EBA from London to Frankfurt in a bid to avoid institutional overlap. It is believed that the UK would be prepared to give up the EBA in exchange for the Frankfurt-based Insurance and Occupational Pensions Authority being re-located to London.
Under the report by Belgian centre-right MEP Marianne Thyssen, the ECB supervisory board would be required to report to national parliaments. MEPs also backed strict separation of the ECB's monetary policy and supervision arms.
Thyssen described the legislation as "an essential first step towards a so-called banking union."
She added that giving the EU's bailout fund, the European Stability Mechanism, the right to directly capitalise ailing banks, would "put an end to the vicious circle between banks in financial trouble and governments with budgetary difficulties."
German Green deputy Sven Giegold, who drafted Parliament's position on the EBA file, said that the committee text would "provide a sound basis for EU banking supervision and responds to the urgent need to address the fragmentation in the European banking system."
With parliament hoping to adopt the package during the December Strasbourg session in two weeks, negotiations between Thyssen and Giegold and ministers will open immediately.
But ministers themselves still need to agree on a joint position, with Germany stalling under the motto "quality before speed." An attempt by the Cypriot EU presidency to reach an agreement will be made on Tuesday during a finance ministers' meeting in Brussels.
Meanwhile, Socialist and Democrat group spokesperson Elisa Ferreira said that MEPs wanted to see the banking union in place as soon as possible. "We will not give EU finance ministers any excuse for delaying the approval of the supervision system mechanism. This should be completed by the end of this year," she said.
At the European Council summit in October, EU leaders agreed that the legal framework for the supervision regime would be concluded by the end of 2012, with the implementation programme starting in 2013.
However, there remain tensions between member states about the scope of the ECB's role, with Germany particularly sceptical. In October, Jens Weidmann, the governor of the German Bundesbank, warned that new supervisory powers for the ECB would create a conflict of interest for the bank.
The status of the 10 countries outside the eurozone could also be a bone of contention. MEPs were divided but a majority decided that 'opt-in' countries would be able to sit on the ECB's supervisory board but not on the decision-making governing board.
The parliament has equal legislative power with ministers on the EBA file but only consultative status for the legislation to beef up the role of the ECB.
The ECB directive requires unanimous support in Council.
But MEPs are anxious not to be sidelined in negotiations and are determined to treat the two files equally, citing the negotiations in 2011 on the economic governance 'six pack' as a precedent where parliament had enjoyed de facto co-decision even though two of the files were consultative.