05 October 2012

Bloomberg: Germany said to support enticing non-euro states into bank plan

The EU is seeking input from the European Commission and the European Central Bank on ways to give non-euro nations a bigger voice on supervision matters at the ECB, which will provide oversight under the plan, according to the officials who are tracking the deliberations. The EU also has asked its lawyers for ways to give non-euro states more say at the London- based European Banking Authority. Germany favours ECB-based ways to give a voice to non-euro nations that take part in the banking union, rather than referring all of their concerns to the EBA or some other avenue, one of the people said. EU officials have asked for suggested policy options as soon as workable.

ECB President Mario Draghi said the central bank is preparing a legal opinion on the single-supervisor proposal to spell out accountability channels and ensure a “clear and robust” separation of bank oversight and monetary policy decisions. He said the central bank welcomes the plan, seeing it as “one of the fundamental pillars of a financial union” and an important building block for the euro area.

The issue is likely to play a pivotal role on whether the ESM is able to aid banks directly and free countries such as Spain and Ireland from the burden of propping up their financial sectors. When EU leaders announced plans to create the single supervisor in June, they explicitly said the goal was to combat the crisis by breaking the link between banks and sovereigns.

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