Europe’s system of banking supervision needs to be revamped — again — because it’s still too bureaucratic and lacks the clout that US regulators have in tackling money laundering, said a leading German central banker.
Andreas Dombret said that banking supervision should be separated from monetary policy in the euro zone, in effect calling for the European Central Bank to be stripped of the bank watchdog function it was given in 2013.
“In the medium term, it would be much better if banking supervision and monetary policy were separated. That would pre-empt possible conflicts of interest,” he said in an interview. “There may be a small loss of efficiency, but both institutions would be markedly more independent.”
Mr. Dombret said it would make sense to merge the ECB’s bank watchdog duties with the European Banking Authority, the EU agency that conducts so-called “stress tests” of banks to check their resilience to crises. “There’s no urgency to address this issue imminently, but this idea definitely shouldn’t be forgotten,” he said.
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