German Finance Minister Wolfgang Schaeuble and Jens Weidmann, the country’s central bank chief, said treaty changes are needed to put a future European banking union on a sound legal footing.
Germany’s Constitutional Court is strict about monitoring the legality of transfers of power away from the government and parliament, said Schaeuble. That could be a resolved by “limited treaty change” that wouldn’t require referendums across Europe as possible, he said.
“The federal government is ready for such treaty changes, the faster the better,” Schaeuble said at a press briefing in Washington today also attended by Weidmann. Any drive to “fudge this a bit because it’s so difficult,” would only result in “things that are of no use, that do not work,” he said.
The European Central Bank and Michel Barnier, the European Union’s financial services chief, have called for a European Resolution Authority to intervene at crisis-hit banks, saying the step is essential to untangle the fates of lenders and sovereigns. Barnier said he will present draft legislation in June.
French Finance Minister Pierre Moscovici said yesterday that the EU should go as far as it can on banking-union plans without treaty change. If treaty change is needed, it should be as limited as possible, he said in Washington.
‘Want it Fast’
“We want a full banking union and we want it fast,” Moscovici said, adding that treaty changes shouldn’t be used as “pretext” to delay banking union.
Schaeuble told his EU counterparts at a meeting in Dublin last week that setting up a central authority to deal with failing banks requires treaty changes. The German minister has also argued that revising the bloc’s rules would benefit the ECB’s bank supervision arm by ensuring independence from monetary policy.
A treaty change for the supervisory mechanism “makes sense in order to have a very clear separation of the two spheres of banking supervision and monetary policy and hence to continue to ensure the focus of monetary policy on the primary goal of the stability of the value of money,” Weidmann said.
Ministers in Dublin endorsed plans to hand supervision powers to the ECB, a step billed by Barnier as a cornerstone of the banking union, after committing to “work constructively” on any proposals for treaty change.
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