Juncker warns against rushing into banking union

(BERLIN) - The head of eurozone finance ministers, Jean-Claude Juncker, said Tuesday that the European Union must not rush into setting up Europe-wide banking supervision.

"It is true that we are determined to put in place a banking union, a banking supervision as quickly as possible, but it is also true that we should take the necessary time for that," he told Bayerischer Rundfunk, according to a statement issued by the regional television station.

"I am for thorough preparations, not for the hasty introduction of a banking union," he added.

EU leaders agreed the new bank supervision system in June as part of a deal to allow the bloc's rescue funds to directly lend to stricken banks instead of passing aid through countries and so adding to their debt problems.

Under the plan, the European Central Bank will assume "strong powers ... for the supervision of all banks in the euro area, with a mechanism for non-euro countries to join on a voluntary basis," according to an EU statement.

It is a first step towards a banking union and sits alongside moves towards the deeper economic and political integration needed to tame the debt crisis which has brought the eurozone economy to a standstill.

The proposal is controversial, reducing the role of the London-based European Banking Authority which was set up in the wake of the 2008 global financial crisis.

It has been opposed by among others Britain, home to the financial centre of the City of London where big eurozone banks have major interests.

Juncker meanwhile said he largely shared Berlin's skepticism that a single supervisor was able to monitor all eurozone banks. Instead Germany wants the ECB to focus on the 'too-big-to-fail' banks whose failure could wreck the system.