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EBA regulator issues euro zone bank union concerns

Monday 15 October 2012 09:24 CET | News

Andrea Enria, head of the European Banking Authority (EBA), cited by online media outlet uk.news.yahoo.com, has raised several concerns regarding banks outside the union mentioning that they may see nervous depositors shift their savings to a lender under the watch of the European Central Bank (ECB).

He has also suggested changing the current voting rules when regulators meet under the broader umbrella of the European Banking Authority, a gathering that would otherwise be dominated by a club of countries in the banking union and proposed as a solution the development of an independent panel to take decisions concerning the entire European Union.

In September 2012, the European Commission has proposed that the European Central Bank take charge of supervising all banks in the euro zone in a gradual process starting in January 2013, as a first step towards creating a banking union under which euro zone countries would eventually jointly back their banks. Yet, the plan has brought a series of concerns among the 10 EU countries which do not use the euro. The banks fear they will be indirectly affected by the ECBs new supervisory powers and put at a competitive disadvantage, whether they choose to join the scheme or not.

Winning broad support for a prompt introduction of the new supervisory framework for the euro zones banks is important because it should allow its rescue fund, the European Stability Mechanism (ESM), to directly inject much-needed capital into banks, such as those in Spain. But it requires the approval of all 27 countries in the European Union before it can go ahead.
 


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Keywords: European Commission, European Central Bank, European Banking Authority, banking union, euro zone
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