Brussels, 17/09/2012 (Agence Europe) - The first ministerial discussion of the legislative proposal granting the ECB the ultimate powers in terms of banking supervision in the eurozone, just three days after it was presented by the European Commission (EUROPE 10686 and 10687), gave rise to major divisions between member states as regards both the content of the measures and the pace for the adoption of the reform, at the informal ECOFIN Council in Nicosia on 14 and 15 September.
The most vociferous criticism of the draft on the table came from Sweden, one of ten countries outside the euro zone with the option to participate in the new single banking supervision mechanism if they so choose. “Any idea that we would be subjected to the supervision of an institution in which we have no voting rights (…) is completely unacceptable”, said the Swedish Finance Minister, Anders Borg. Under the treaty, the decisions of the ECB apply only to the eurozone. The Commissioner for the Single Market, Michel Barnier, acknowledged that there is a “legal problem related to the internal rules” of the Frankfurt-based institute. “We will continue to work to improve the provisions”, he added, stressing that the supervisors of the non-eurozone countries which opt in to the single supervision system will have access to all information and will have a seat around the negotiating table. Acknowledging that on this point, the proposal does not lay down voting rules, the vice-president of the ECB, Vitor Constancio, spoke of a provision of the future regulation which calls “upon the ECB to define the terms under which these countries will participate in the supervisory committee”. This committee will indeed be created within the European institution. “This is a possibility, not an ex ante guarantee”, he added.
Supported by all the countries which have not adopted the single currency, the Swedish minister also spoke out against a situation of imbalance within the European Banking Authority (EBA), which will continue to guarantee the existence of a body of single banking rules within the internal market. The ECB, which represents 17 countries, would be able to call the shots within the EBA. Due to its independence, which is laid down in the treaties, it would be under no obligation to comply with the decisions of the EBA and, if it came down to it, would simply be obliged to explain its refusal to come in line with the decision. “The ECB will have to comply with the decisions of the EBA”, Constancio replied. On this subject, Barnier took pains to alleviate the “concerns” of the countries outside the eurozone as regards a potential regulatory fragmentation: “I'm accountable for the integrity of the single market, which is our main basis to come out of crisis”. He added that he hoped that all EU27 countries would continue their regulatory work within the EBA, and that a banking restructuring framework, as well as banking capital requirements ('CRD4' package), would be created for the whole of the EU.
As regards the scope of application for the single banking supervision, several countries (Austria, the Netherlands and Malta) supported Germany, which wants to limit the competence of the ECB to banks of systemic importance. The United Kingdom, which is unlikely to take part in the process, supported France and the Commission, which believe that the ECB should eventually supervise all the banks of the eurozone.
Timetable. The member states are also divided over the pace of reform. France is pushing for the dossier to be concluded by the end of December, as per the request of the eurozone Summit (EUROPE 10645). The process should “be concluded as quickly as possible”, said the French Minister for the Economy, Pierre Moscovici. The Cypriot Finance Minister, Vassos Shiarly, said that his country was “happy to work with that deadline in mind”. The first meeting of the ad hoc working group of national experts of the Council will take place on 27 and 28 September. It is worth noting that in order to slow down the process, Germany imposed a requirement for this working group first of all to be constituted at a technical, rather than political, level. Barnier said that while this timetable is “ambitious”, it remains “realistic and necessary”. He went on to state that “there is no question that on 1 January 2013, the ECB will be responsible for the daily supervision of 6,000 banks. The operation and implementation (of the rules) will be gradual through 2013 and into 2014. But we believe that in order to be credible, the ECB should, from the very beginning, have the legal right to examine the financial situation of a specific bank”.
Other countries, on the other hand, believe that it will be impossible to observe the timetable laid down in a legislative text requiring the unanimity of the EU27 within the Council. This will be “impossible”, in the view of the German Finance Minister, Wolfgang Schäuble. The Netherlands, Denmark, Poland and Sweden tend to agree.
The accession of the ECB as sole supervisor of the eurozone banks is the sine qua non condition laid down by Germany for the future European Stability Mechanism (ESM) to be able to recapitalise struggling banks directly, as Madrid and Rome have petitioned hard for. Berlin has also poured cold water on the hopes of countries which believe that direct banking recapitalisation through the ESM will take place immediately after the adoption of the “single banking supervision” package. In order to take this step, a political decision will be required. (MB/transl.fl)