French minister wants broad EU banking supervisor

(PARIS) - French Finance Minister Pierre Moscovici said Monday that a European banking sector supervisor should oversee all eurozone banks by January, a position at odds with that of Germany.

"Banking supervision should apply to all eurozone banks by the end of 2012," Moscovici told a press conference held in Paris with Italian counterpart Vittorio Grilli.

That would "allow for the implementation of direct bank recapitalisations to protect the eurozone," the French minister added.

In late June, European Union leaders mandated the European Commission to make propositions for the creation of a single supervisor for eurozone banks as a first step towards a full banking union for the 17-nation bloc.

A banking union is deemed necessary for direct recapitalisations of troubled eurozone banks, a move designed to avoid adding debt to the budgets of struggling eurozone member states.

Germany has opposed having the supervisor oversee all eurozone banks however, saying it would be better to focus on those that are so big that their failure would represent a threat to the entire eurozone banking sector.

Critics say that Berlin seeks in fact to protect state-owned regional banks from intrusive oversight procedures.

On September 4, a European Central Bank official, German board member Joerg Asmussen, told a Frankfurt banking congress that the ECB was willing to act as a foundation for the future supervisor, but said it should initially only oversee banks that are "systemically relevant nationally and Europe-wide."

It would not be realistic to have a supervisory authority that oversees all banks in the euro area up and running by the start of next year, Asmussen said.

Moscovici said Tuesday he hoped talks on the matter "will progress rapidly, because the stakes are very high.

"What I know of the Commission's propositions goes in the right direction and will have our full support," he added.