ECB eyes up increased supervisory role

THE European Central Bank is considering an increased supervisory role in the financial sector in Europe, ECB president Jean-Claude Trichet said yesterday.

“At this stage we are reflecting, meditating,” he said at a conference on globalisation. “I would say it might be possible.”

In the wake of the financial crisis, a number of top ECB officials, including the bank’s vice president, Lucas Papademos, and executive board member, Lorenzo Bini Smaghi, have said the bank could take on an overarching supervisory role in Europe.

However, the proposals have been met with caution by some senior European decision makers and analysts say deeply entrenched national interests may hinder the plans, while Britain would also have to sign up to give the new powers any real clout.

Trichet said the ECB could play a role without renegotiating EU treaties because of an existing clause. He added that in a decentralised system the ECB could act as an agency of final recourse.

Responsibilities for bank supervision in Europe vary. In some countries, it is the job of the national central bank while others have established separate bodies for the role.