Brussels, 12/09/2012 (Agence Europe) - EU Internal Market Commissioner Michel Barnier said on Wednesday 12 September that the draft legislation unveiled by the European Commission the same day to give the European Central Bank over-riding powers over bank supervision in the eurozone was unprecedented in terms of polling economic and financial sovereignty (see EUROPE 10686). Moving from coordination of national bank supervisory bodies to integrated supervision of all the 6,000-odd banks in the eurozone is political, rather than technical, matter and what the Commission is proposing is surveillance and control over the major source of financing of the European economy, which is also the main source of risk for countries and taxpayers.
The draft legislation comprises two draft regulations, one setting up a supervision mechanism and one changing the way the European Banking Authority (EBA) operates. This is the precondition laid down by Germany for any direct capitalisation of struggling banks by the eurozone (see EUROPE 10645). Barnier explained it as follows: - Who? The ECB; - How? Based on national bank supervisory bodies that will be keeping certain exclusive powers, like consumer protection; - Which banks? All of them, in order to make the new supervision mechanism credible; - When? As soon as the rules have been introduced, the ECB will be able to intervene in risky banks. If all goes to plan, the ECB will be able to start examining the finances of problematic banks on 1 January 2013, in other words banks in receipt of public money. The system will be fully up and running by the end of 2013.
Regulation is not the same as supervision. Fears have been expressed about how the new legislation will impact on the single bank market and the ECB's future relations with supervisory bodies of non-euro countries. Barnier pointed that regulation was not the same as supervision. The EBA, which is made up of representatives of all Member States' bank supervisory bodies, will retain responsibility for applying a single rule book. The Commissioner recognised that it was important to ensure that non-eurozone countries remain well-represented at the EBA. Non-euro countries will continue to apply their own bank supervision system. For cross-border banks (operating in more than one country), the principle of home and host country will continue to apply. Michel Barnier explained that the only thing that would change was the nature, the character, of supervision in the eurozone, not regulatory work as such. (MB/transl.fl)