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ECB proposes centralised supervision of European banks PDF Print E-mail
News - Latest
Wednesday, 12 September 2012 15:09

The European Commission has today proposed a single system of supervision for eurozone banks, led by the European Central Bank.

It says this will help ensure banks stick to sound financial practice, help tackle the sovereign debt crisis and help prevent future crises.

The Commission has also proposed that the European Banking Authority develop a Single Supervisory Handbook to preserve the integrity of the single market and ensure coherence in banking supervision for all 27 EU countries.

President of the European Commission, José-Manuel Barroso, said: "We want to break the vicious link between sovereigns and their banks. In the future, bankers' losses should no longer become the people's debt, putting into doubt the financial stability of whole countries.

"Today, the Commission has presented proposals for a single European supervisory mechanism, a major step to a banking union. This new system, with the European Central Bank at the core and involving national supervisors, will restore confidence in the supervision of all banks in the euro area.

“The European Parliament will have a crucial role to play in ensuring democratic oversight. We should make it a top priority to get the European supervisor in place by the start of next year. This will also pave the way for any decisions to use European backstops to recapitalise banks."

Internal market commissioner, Michel Barnier, said: "Banking supervision needs to become more effective in all European countries to make sure that single market rules are applied in a consistent manner.

“It will be the role of the ECB to make sure that banks in the euro area stick to sound financial practices. Our ultimate aim is to stop using taxpayers' money to bail out banks.”

He continued: "We have proposed a mechanism to separate supervision from monetary policy within the ECB and made sure that the ECB will be accountable to the European Parliament for supervisory decisions.”

The Commission claims the new system will also help to protect the UK financial system and there will be strong safeguards to protect the interests of the UK and other non-euro area countries.

It has called for the Council and European Parliament to adopt today's proposed regulations by the end of 2012, together with the other three components of an integrated banking union – the single rulebook in the form of capital requirements, harmonized deposit protection schemes, and a single European recovery and resolution framework.

 

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