Mixed response to bank supervisor plan

EU leaders are to discuss a European Commission plan to introduce a single supervisor for banks in the eurozone – but they need to deal with many difficult issues before the proposal can take any meaningful steps forward.

Michel Barnier, the European commissioner for the internal market, said he was still determined to reach agreement on the draft legislation by the end of the year. But he acknowledged that he would have to modify the proposal. “I believe that our proposal can and needs to be improved in a number of areas,” Barnier said at the conclusion of a meeting of European Union finance ministers in Luxembourg on Tuesday (9 October).

He said that it was important to come up with a “fair system” for countries that are not in the eurozone but that want to be part of the supervisory system. One of the biggest sticking points is how the European Central Bank (ECB) – which is likely to take on the supervisory role – will give a voice to the non-eurozone countries that choose to fall under its authority. Barnier said that the solution “falls partly to the ECB” rather than the Commission, as it was as much a legal problem as a political one.

Non-eurozone countries, particularly the UK, have raised concerns about the effect the banking supervisor plan could have on the functioning of the London-based European Banking Authority (EBA) – the body that rules on cross-border banking disputes. If the rules stayed as they were, national supervisors and banks would be bound by EBA rulings, but the ECB would not.

Barnier said that the Commission had to clarify relations between the EBA and countries under the single supervisory system “to make sure all member states continue to accept the EBA as the arbiter in a market made up of 27 member states”.

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