Common supervision of European banks, possibly by the European Central Bank, would help restore confidence and protect the financial system, ECB Governing Council member Panicos Demetriades said yesterday.
German business newspaper Handelsblatt reported on Friday that the European Commission would next month propose giving the ECB super-vision over all of the eurozone’s major banks.
Demetriades, who is also governor of the central bank of Cyprus, told the Cypriot newspaper Kathimerini that the eurozone faced “unprecedented challenges” and that such a banking union was expected to foster greater confidence in the bloc.
“Common supervision of banks of the EU, which possibly the ECB will have responsibility over, is expected to offer greater protection of deposits, restore confidence, and better protect the financial system from risks,” Demetriades told the news-paper.
He said the commission was expected to disclose a more analytical proposal on Sep 11.
At the end of June, EU leaders agreed to set up a single banking supervisor in Europe as a pre-condition to letting the eurozone’s rescue funds directly inject cash into lenders without lending to a government first.
It is part of a wider EU effort to stop the banking and eurozone debt crisis feeding each other.
Handelsblatt said the commission envisaged national authorities supervising day-to-day business and the ECB only intervening where it saw “dangerous risks”.
Outside the eurozone, national banking supervisors would stay in charge of their banks, the paper reported.
Stefaan de Rynck, spokesman for Michel Barnier, the European commissioner for financial services who is drafting the proposal, said on Friday how the ECB would work with local regulators on the ground was still being fleshed out.
© Irish Examiner Ltd. All rights reserved