The euro zone’s move toward common bank oversight must be accompanied by a common process for handling failing banks, European Union Economic and Monetary Affairs Commissioner Olli Rehn said today.
“It’s important that both supervision and resolution will be at the same level, in this case at the euro-zone level,” Rehn said in a Bloomberg Television interview in Washington. “They have to go hand in hand.”
The European Central Bank is set to take on oversight powers next year over all euro-area banks after the legislation underpinning the supervisory system was signed off today in Brussels.
“This agreement on the single banking supervisor is a major step towards banking union,” Irish Finance Minister Michael Noonan said in an e-mailed statement. “We need to build on this momentum to make progress on the next building blocks: bank resolution and deposit guarantees.”
Ireland holds the rotating presidency of the 27-nation EU.
The European Commission remains on track to unveil its proposal for a single resolution mechanism “before the summer,” Rehn said. He said further moves toward banking union are needed to prevent a recurrence of the sovereign debt and banking crisis that has so far forced five of the euro zone’s 17 nations to seek aid.
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