Tuesday

5th Mar 2024

Ministers hoping to bridge divide on EU banking supervision

  • The ECB is set to become supervisor of the eurozone banking sector (Photo: Valentina Pop)

EU finance ministers are meeting Wednesday afternoon (12 December) in a bid to reach a deal on rules making the European Central Bank the single supervisor of the eurozone banking sector.

“There are five issues that need to be tweaked", according to one senior EU official.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

They include the voting system in the existing pan-EU banking regulator (EBA) and the decision-making process in the supervisory board of the European Central Bank.

There is also expected to be discussion on which banks the ECB will directly supervise.

The Frankfurt-based bank is expected to oversee significant banks, as well as those having received public money and those with cross-border operations.

However, it is not clear what significant means in terms of prompting the Frankfurt supervision. The current draft proposal would classify a 'significant' bank as having for assets worth at least €30 billion or 20% of national GDP, although some governments, including Germany, are bidding for a figure close to the $50 billion threshold used in the US.

The rest of the banks will remain under national supervision but the ECB is likely to have the “legal right” to step in if it wants to.

Negotiations are also expected on maintaining the independence of the bank as well as when the single supervisory mechanism (SSM) should come into force by putting in place a 'Chinese wall' to clearly demarcate the ECB's monetary policy role from bank supervision.

The law governing the SSM is expected to come into force mid 2013 with the ECB to assume the role in 2014.

Current wording allows for the bank to defer its supervisory role until April 2014 if it feels it is not ready.

However pressure from Germany and others may see this potential deferring period extended until July 2014.

But despite the outstanding points, diplomats are relatively confident that finance ministers will reach a deal – if only because no one has much appetite for seeing the issue come to the table of EU leaders, meeting in Brussels for their December summit on Thursday and Friday.

"Clearly the overall success of the summit and of the work this autumn will be very largely judged on whether there is agreement tonight on a single supervisory mechanism,” said one diplomat.

“I am pretty confident that we will find a solution,” said another.

Franco-German rift derails banking union deal

EU finance ministers will return to Brussels on the eve of the December EU summit next week for last ditch talks on the controversial banking union proposals, after failing to reach agreement on Tuesday.

Draghi seeks to allay German concerns on banking union

European Central Bank chief Mario Draghi sought to downplay a clash of views with the German government over the scope of a new banking supervisor by suggesting a bigger role for national supervisors when it comes to small regional banks.

Opinion

The six-hour U-turn that saw the EU vote for austerity

The EU's own analysis has made it clear this is economic self-sabotage, and it's politically foolish three months from European elections where the far-right are predicted to increase support, writes the general secretary of the European Trade Union Confederation.

Opinion

Why are the banking lobby afraid of a digital euro?

Europeans deserve a digital euro that transcends the narrow interests of the banking lobby and embodies the promise of a fairer and more competitive monetary and financial landscape.

Latest News

  1. EU agrees rules to ban products made with forced labour
  2. I'll be honest — Moldova's judicial system isn't fit for EU
  3. Rafah invasion — a red line for EU on Israel?
  4. EU must overhaul Africa trade offer to parry China, warns MEP
  5. EU watchdog faults European Commission over Libya
  6. Hungary's Ukrainian refugees in two minds as relations sour
  7. The six-hour U-turn that saw the EU vote for austerity
  8. Defence, von der Leyen, women's rights, in focus This WEEK

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Join EUobserver

EU news that matters

Join us