Brussels, 22/08/2012 (Agence Europe) - The European Commission is working overtime to be able to present its legislative proposal on establishing a single banking supervision mechanism for the eurozone by Tuesday 11 September. In line with decisions taken at the eurozone summit end June (see EUROPE 10645), the mechanism will entrust ultimate surveillance responsibility to the ECB, while the EU17 supervisors should also continue to carry out the task of oversight on a daily basis. Early August, Internal Market Commissioner Michel Barnier said that 6,000 banks would be concerned, explaining that the new mechanism would not simply cover the financial institutions of a systemic nature (EUROPE 10670).
The banking union - which will be in place end 2012, it is hoped, with the launch of work on the creation of a European deposit guarantee fund and a Community system for banking restructuring - is the essential condition for allowing the European Stability Mechanism (ESM), the future European permanent rescue fund with €500 billion in its coffers, to directly intervene for the bailout of the banking sector in difficulty. The measure, which Spain is pushing, should make it possible to deal separately with the banking crisis and the sovereign debt crisis. In the case of direct intervention by the EMS for recapitalisation of the national banking sector, the eurozone country concerned would not have its public debt increased and, therefore, would not be forced to call further on financial markets for refinancing. (MB/transl.jl)