Germans and Finns fight Commission's plan for bad banks
Germany and Finland said yesterday that the European Commission should not have the final say on when and how a eurozone bank could be closed, a position that could further delay the bloc's banking union project.
A single authority to decide the fate of eurozone 'problem banks', with a dedicated fund to finance its decisions, is intended to complement the single bank supervisor –the European Central Bank – as part of a banking union that would break the vicious circle between weak banks and indebted governments.
The ECB is to take up its new responsibilities in autumn of 2014 and EU policymakers are now planning to have the resolution body – which would help or wind up problem banks – ready on January 1, 2015.
Until then, bank resolution would be governed by a set of common rules for all national authorities, called the Bank Recovery and Resolution Directive.
ECB executive board member Joerg Asmussen said yesterday that the eurozone bailout fund, the European Stability Mechanism, could lend to the resolution fund if necessary in this interim period and then get paid back from bank contributions as enough money accrues.
But the role of the European Commission is contentious.
It proposed in July that it should have the final say on troubled banks at a pan-European level, even though it could act on the recommendation of a Single Resolution Board that would be made up of representatives of national authorities and the European Central Bank.
Berlin has consistently said those powers should be exercised at a national level.
"Resolution should generally be done by national authorities and not by the EU Commission," German Finance Minister Wolfgang Schaeuble told the 'Boersen Zeitung' newspaper.
"It is not an appropriate central resolution authority.
"Instead, where necessary in disputed cases, a central resolution board should be able to take binding decisions when there are conflicts between national resolution authorities," he said. (Reuters)