Monday 23 October 2017

Germany warns bank rules may be 'trouble'

German finance minister Wolfgang Schaeuble fired a warning shot over Cyprus' economic status (AP/Markus Schreiber)
German finance minister Wolfgang Schaeuble fired a warning shot over Cyprus' economic status (AP/Markus Schreiber)
Colm Kelpie

Colm Kelpie

GERMANY says proposals on how to shut bust banks need to stay within the terms of the Lisbon Treaty, warning of major trouble otherwise – including uncertainty in the markets.

The European Commission will today publish its plans for a so-called single resolution mechanism (SRM), the second pillar of a banking union, but German Finance Minister Wolfgang Schaeuble warned of the need to stick within current European laws.

The proposal follows agreement on a single bank supervisor for the eurozone earlier this year and political agreement on a common set of bank resolution and recovery rules set out last month.

Interpretation

At a meeting of European finance ministers in Brussels, Mr Schaeuble said: "I would strongly ask the Commission in its proposal for an SRM to be very careful and stick to the limited interpretation of the treaty." He said Europe risks "major trouble'' if it doesn't stick within current laws.

French Finance Minister Pierre Moscovici said France wanted to see an agreement on the SRM by the end of the year.

Mr Schaeuble has in the past warned that while elements of a banking union can be progressed under existing laws, a full banking union would need a change to the existing treaty.

That could spark a referendum in Ireland. Finance Minister Michael Noonan, however, has said he believes full banking union can be rolled out under existing laws.

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