Brussels, 29/11/2012 (Agence Europe) - On Thursday 29 November, the European Parliament's Economic and Monetary Affairs Committee adopted its position on the draft legislation to introduce a eurozone bank supervisory mechanism under the aegis of the ECB that will cover every bank in the eurozone. Using the existing EU treaties, the draft rules make the best guarantee of equal treatment for non-euro countries that may join the supervisory mechanism when it comes to the decision-making process at the ECB and the European Banking Authority (EBA). On Tuesday 4 December, the member states will try to reach overall agreement on the draft legislation, which the European Summit wants the legislator to complete by the end of the year. If it does so, then informal talks between the EU and the Cypriot Presidency will start immediately.
Banks work across borders, and so must surveillance, explained Marianne Thyssen (EPP, Belgium), calling for a truly European bank supervision system with the ECB involved as a credible institution and protection of the single market. She welcomed the huge majority for the two reports voted upon and the speed with which the Parliament had been able to decide on its position. Once the eurozone bank supervisory mechanism has been set up, banks needing a public bailout will be able to request it directly from the European Stability Mechanism (ESM), she explained.
The rapporteur on the regulation giving the ECB ultimate responsibility for the system explained the solution the MEPs had found to ensure equal treatment under the current EU treaty for all countries involved in the system (the seventeen eurozone nations and other countries that may decide to join). A Supervisory Committee would be set up to hive off monetary work from bank supervision at the ECB, with all participating countries having a single vote on the passing of decisions prepared by an executive committee comprising independent figures and having a European mandate. Under the Lisbon Treaty, only the ECB Governing Council and Executive Board can take binding decisions so the draft Supervisory Committee decision would have to be endorsed without amendment - a similar process to decisions taken without debate (point A) at the Council of Ministers, said Thyssen, failing which the Supervisory Committee would be able to amend its own draft until it was endorsed by the Governing Council.
At the last ECOFIN Council, Sweden demanded a technical adjustment to the treaty as the only way to ensure fair treatment for non-euro countries in the bank supervisory system.
Other measures suggested by the Parliament should restrict the influence of the ECB Governing Council, which would no longer have the power to appoint the head of the Supervisory Committee, a procedure in which the Parliament has given itself an important role. Repeating an idea discussed at the Council, the Parliament committee suggests setting up a system to appeal against an ECB supervisory decision.
Sharing the work. The ECB would have the ultimate responsibility in the eurozone, but should focus surveillance on banks that have requested state aid. National bank supervisory bodies would be expected to ensure respect on a daily basis of supervisory decisions taken by the European bank supervisory system, particularly for regional banks that are not too-big-to-fail.
EBA. The creation of a single bank supervisory system will have implications for how the European Banking Authority operates. Europe's biggest financial centre, the City of London, has decided to stay out of the mechanism for fear that it would be forced to apply financial regulations inspired by the ECB. The ECB could have a dominant role at the EBA if eurozone countries coordinate their views. Aware of the anger from London, Sven Giegold (Greens/EFA, Germany), rapporteur on the regulation amending how the EBA operates, explained the process the committee had come up with, with a phasing out period when guarantees would be given to countries outside the supervision mechanism as long as there are enough of them. He suggested 23 countries in the system could mean the guarantees are withdrawn.
On the role of binding mediation in the event of a dispute among national supervisors, Giegold regretted the fact that the Parliament had not forced the same procedure on the ECB because it would have had the benefit of reassuring non-euro countries that want to join the common bank supervisory mechanism.
The MEPs give the EBA more powers as suggested in the Commission's proposal that the EBA set up its own supervisory methodology. The EBA should, said Giegold, be able to obtain any information it needs for carrying out bank stress tests. (MB/transl.fl)