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15 July 2012

FT: EBA chief plots path to banking union


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Andrea Enria, head of the European Banking Authority, sees two key routes to a workable banking union supervisory structure, but both would give more power to the ECB.


Part of Mr Enria's focus now is likely to shift inwards, as European policy-makers debate how precisely to police a new banking union for the eurozone. The process promises to be no less bruising than the stress tests and recapitalisation exercises that dominated the EBA’s first 18 months. But Mr Enria – a convinced europhile who has worked at the European Central Bank and the Bank of Italy – is braced. He is convinced that the maintenance of a valid single market, let alone the single currency, depends on boosting the structures that oversee it.

“We have seen a lot of segmentation in the market, a lot of retrenchment to national markets”, he says. “The cross-border money markets and interbank market disappeared. The slight signs of life we saw were within national markets. I don’t think you can maintain a single currency area with a market which is completely segmented. The need to bring the safety mechanism to a European level is very clear. And in doing that you need to obviously bring the controls to a European level.”

He sees two key routes to a workable banking union supervisory structure, but both would give more power to the ECB. Something akin to the UK’s current absorption of the Financial Services Authority’s bank regulation activities into the Bank of England would be one route, while the other would see the EBA continuing to set the rules for European banks, but with the policing of those rules centralised with the ECB for eurozone countries, and left with national regulators for other EU nations.

“The important thing is that we get [the structure] right. If the right arrangements mean totally reshaping the EBA, that’s fine.”

Full article (FT subscription required)



© Financial Times


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