AP News

Report: Barnier: euro banks need central oversight


BERLIN (AP) — A top European Union official is calling for all eurozone banks to be centrally supervised and for the European Central Bank to do the job, according to an interview published Thursday.

The European Commission will make proposals for EU-wide banking supervision next month after European leaders in June called for it as part of efforts to tackle the debt crisis in the 17-nation eurozone and restore confidence.

EU internal market commissioner Michel Barnier was quoted as telling German daily Sueddeutsche Zeitung's Friday edition that the plan is for more than 6,000 banks in eurozone countries to be supervised by the ECB "in close cooperation with national supervisors."

Governing party lawmakers in Germany argue some smaller banks don't need ECB supervision. But Barnier contested that.

"We are convinced that all banks must be centrally supervised. Otherwise, serious problems can arise," he said, arguing that Britain's Northern Rock, Spain's Bankia and multinational lender Dexia weren't originally considered so big that their failure might pose a threat to the system, but then had to be rescued with public money.

Barnier said plans call for all banks being helped by the eurozone's permanent rescue fund to be centrally supervised starting next January. Big banks would be subject to central oversight from July 2013 and the system could be extended to all banks in January 2014.

The ECB will be given "all necessary instruments" to oversee banks effectively and will have ultimate responsibility for all decisions, Barnier was quoted as saying.

Also in June, EU leaders agreed that funds set up to bail out indebted governments could be allowed to funnel money directly to stressed banks — rather than via governments, adding to their debt burden — once an effective central bank supervision system is set up.

Barnier said he believes it is possible to set up the supervision system by the end of this year, Sueddeutsche Zeitung reported. He added that, if eurozone countries and the European Parliament play along, banks could be financed directly from the European Stability Mechanism, the permanent rescue fund, from the beginning of 2013.


American Apparel's Future
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus