Skip to content. | Skip to navigation

Personal tools
Sections
You are here: Home Breaking news ECB sets out conditions for new bank supervisory role

ECB sets out conditions for new bank supervisory role

04 September 2012, 16:06 CET
— filed under: , , , , ,
ECB sets out conditions for new bank supervisory role

Jörg Asmussen - Photo Martin Jost

(FRANKFURT) - The European Central Bank is willing to take on a supervisory role for the European banking system only if certain conditions are met, a top ECB official said on Tuesday.

"The ECB, along with the national central banks, has already said it is prepared to take responsibility as a supervisory authority," ECB executive board member Joerg Asmussen told a banking congress here.

But the ECB would only do so "if certain conditions are met," Asmussen told the congress organised by business daily Handelsblatt.

The ECB's overriding mandate to maintain price stability in the 17 countries that share the euro "must remain untouched", he said.

Monetary policy "must be separate from banking supervision, both in terms of organisation and personnel," Asmussen said.

"This can be achieved by way of Chinese walls and the creation of a new decision-making body -- alongside the ECB governing council -- that will be responsible for all supervisory tasks."

The ECB "will also be careful to ensure that its independence is not impaired in any way," Asmussen continued.

The bank must also have at its disposal all the necessary instruments to effectively carry out its supervisory role, including access to information and the power to "shut down if necessary banks that cannot survive on their own," the expert said.

Such powers would have to be enshrined in Europe-wide guidelines.

Without these rules, "the ECB will, from my point of view, not take on any responsibility, because the risks to our reputation would be too great," Asmussen said.

The ECB official also suggested the new supervisory body should initially only oversee the biggest 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.

"It is important that a European oversight body is in a position to function efficiently from the very beginning," he said.

EU Commission chief Jose Manuel Barroso is to present proposals for a single common supervisory body on September 12, with the ECB expected to be handed the responsibility.

But there are disagreements between the 17 eurozone members as well as in the wider European Union over how fast and to what extent to centralise the current system which relies on national supervisors loosely monitored by the London-based European Banking Authority (EBA).

In particular, the EU Commission and Germany appear to still differ on the scope for the bank supervisor.

EU Commissioner Michel Barnier recently said that eurozone banks would gradually come under the remit of a new common supervisor with complete authority over all 6,000 lenders reached in January 2014.

But German Finance Minister Wolfgang Schaeuble said "we cannot expect a European watchdog to supervise directly all of the region's lenders -- 6,000 in the eurozone alone -- effectively."

Schaeuble called this "common sense", although critics charge that Germany is seeking to protect its regional banks.


Document Actions