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The German Savings Banks and Giro Association (DSGV) has sharply criticised the planned European Banking Union. They say the concept would lead to chaos, and that it lacks the democratic legitimacy and a legal framework in terms of administration. The President of the German Savings Banks and Giro Association (DSGV), Georg Fahrenschon, described the plans for the implementation of a Banking Union as an "unserviceable" concept, that violated "basic democratic principles".
"The banking union will not work in the proposed format", said Fahrenschon at a financial market conference in Berlin. The basic idea to create a functioning banking supervision together with a functioning resolution mechanism was right - banks should be able to fail. But the current approach would only lead to a chaotic conflict of competence as it was disregarding essential legal principles.
A bank resolution constituted a serious interference with fundamental rights. Fahrenschon said that in order to carry out such a task, one "had to have democratic legitimisation, appropriate legislative power and democratically legitimised access to national budgets and clear legal procedures", none of which, he said, the DSGV could detect in the Commission's proposal for a common banking resolution mechanism. "Separation of powers, national sovereignty and the rule of law are no trifles. In the light of all these details, we strongly suggest that the power to decide about banking resolution should stay on the national level", Fahrenschon concluded.
Further reporting (in German) © Deutsche Wirtschafts Nachrichten
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