Brussels, 04/02/2014 (Agence Europe) - Addressing the European Parliament's economic and monetary affairs committee on Monday 3 February, German national Sabine Lautenschläger of the European Central Bank's executive board said it would be better to have a transition period of less than ten years for building up the single resolution fund (SRF). The committee has called for Lautenschläger to be made deputy chair of the supervisory board to be set up at the ECB as part of banking union.
Lautenschläger said: “In order not to create moral hazard between the banks, it will be crucial to have a risk-adjusted levy system for contributions by the resolution fund”.
In answer to a question from Werner Langen (EPP, Germany), she echoed her colleague, French national Benoît Coeuré, in saying that, where possible, it would be best for the SRF to be built up in a period of less than ten years. She said the planned budget, €55 billion, for the SRF after the transition period would be sufficient if bail-ins were taken seriously and she wanted the fund to be backed by a fiscally neutral backstop.
In answer to a question from Sven Giegold (Greens/EFA) about this fiscally neutral backstop, she said that, in her view, budget neutrality ensured that, at the end of the day, no money would be paid out by the taxpayer to wind up a failing bank. If any public money were to be paid, she said it should be paid back at a later date, adding that, for bail-ins, recourse to the SRF, which will later become a genuinely common fund, would only be as a last resort.
On the legal basis for the draft regulation to establish the single resolution mechanism (SRM), Lautenschläger said she was a purist and had problems with Article 114 of the EU treaty (single market). She commented: “As the most of you do, I would have preferred a pure European solution, instead of an intergovernmental agreement, but I have to accept the constraints in national laws. Nevertheless, I am hoping for a compromise on the SRM and SRF, because starting the SSM in November without clarity about the resolution system would clearly be disadvantageous”.
In response to a question from Sylvie Goulard (ALDE, France) on a clear separation between monetary policy and bank supervision at the ECB, she said that work was ongoing at the bank on a code of conduct for bank supervisory work. (EL/transl.fl)