News
BackOn September 2012, internal market commissioner Michel Barnier presented the package for banking supervision, which has been in progress since June and which shall guarantee an independent and democratic control of the Euro banks.
The first regulation shall pave the way to transfer the bank supervisory competencies of national authorities to the ECB. Thereby, the ECB does not only get a more detailed insight in all 6,000 banks in the Euro zone, but it will also be authorized, among other, to grant resp. to withdraw bank and financial licenses.
The second regulation concerns the already existing European Banking Authority (EBA), which shall continue to fulfil its responsibilities: continuing the development of a single banking framework for all 27 Member States as well as securing Union-side supervisory practices.
In its latest Communication, the Commission also presented a timetable in respect of further steps towards a banking union.
Unanimous adoption of the Member States required for implementation of the regulations
As the regulations are based on Article 127 (6) of the EU Treaty, the proposed regulations are only required to meet the approval of the Euro Member States and not of the European Parliament. This fact is one of the most criticised points as the European Parliament is not involved in setting up the single supervisory mechanism. Should the Council accept the proposals, the European Parliament will assume the role as supervisor of the supervisors; however, it will not be very well armed: the ECB is only obliged to be accountable to the European Parliament.
First assessments
Another point of criticism – in particular voiced by the German Finance Minister – is the concern that the ECB would not have the capacity to supervise 6,000 banks. According to the Commission, by 2014 all banks shall be controlled by the ECB and no longer by national authorities. This raises new concerns as it will be left to the ECB, in what order it will supervise the banks.
Having said that, the request of Commission and ECB to remove both control and identification of ailing banks from the responsibility of national supervisory institutions, must be rated as positive. The fact is that national supervisors have obviously ignored many serious undesirable developments, which concealed weaknesses of the financial institutions for such a long time that the financial loss could only be stemmed with taxpayers’ money. Hence, a more effective supervision of the banks has to be welcomed, provided that the say and the right of information of employees and trade unions as well as the democratic control by the European Parliament are guaranteed.
Today’s proposal by the Commission includes some important competencies for a more effective supervision of European Banks, such as:
-Assessment of acquisition and sale of banks resp. bonds
-Carrying out stress tests to measure financial or banking stability
-Intensive control of credit institutions in financial conglomerates
The Commission would like to start implementing the regulation as early as January 2013. Today’s package is a first step towards the planned banking union, which shall be completed by proposals for uniform equity requirements, a framework for bank rehabilitation and liquidation as well as a harmonised deposit guarantee. Over the coming weeks, the European Trade Union Confederation will analyse the package in more detail and scrutinize it for weaknesses. ETUC will assess the plans in October. One thing, however, is clear already - the banking union must be complemented by stricter regulation of the financial sector. Commissioner Barnier has made many relevant suggestions, which, however, were watered down all too often. He is hoping to have finalised the most important sectors of the financial market regulation by the end of 2013.
The second regulation concerns the already existing European Banking Authority (EBA), which shall continue to fulfil its responsibilities: continuing the development of a single banking framework for all 27 Member States as well as securing Union-side supervisory practices.
In its latest Communication, the Commission also presented a timetable in respect of further steps towards a banking union.
Unanimous adoption of the Member States required for implementation of the regulations
As the regulations are based on Article 127 (6) of the EU Treaty, the proposed regulations are only required to meet the approval of the Euro Member States and not of the European Parliament. This fact is one of the most criticised points as the European Parliament is not involved in setting up the single supervisory mechanism. Should the Council accept the proposals, the European Parliament will assume the role as supervisor of the supervisors; however, it will not be very well armed: the ECB is only obliged to be accountable to the European Parliament.
First assessments
Another point of criticism – in particular voiced by the German Finance Minister – is the concern that the ECB would not have the capacity to supervise 6,000 banks. According to the Commission, by 2014 all banks shall be controlled by the ECB and no longer by national authorities. This raises new concerns as it will be left to the ECB, in what order it will supervise the banks.
Having said that, the request of Commission and ECB to remove both control and identification of ailing banks from the responsibility of national supervisory institutions, must be rated as positive. The fact is that national supervisors have obviously ignored many serious undesirable developments, which concealed weaknesses of the financial institutions for such a long time that the financial loss could only be stemmed with taxpayers’ money. Hence, a more effective supervision of the banks has to be welcomed, provided that the say and the right of information of employees and trade unions as well as the democratic control by the European Parliament are guaranteed.
Today’s proposal by the Commission includes some important competencies for a more effective supervision of European Banks, such as:
-Assessment of acquisition and sale of banks resp. bonds
-Carrying out stress tests to measure financial or banking stability
-Intensive control of credit institutions in financial conglomerates
The Commission would like to start implementing the regulation as early as January 2013. Today’s package is a first step towards the planned banking union, which shall be completed by proposals for uniform equity requirements, a framework for bank rehabilitation and liquidation as well as a harmonised deposit guarantee. Over the coming weeks, the European Trade Union Confederation will analyse the package in more detail and scrutinize it for weaknesses. ETUC will assess the plans in October. One thing, however, is clear already - the banking union must be complemented by stricter regulation of the financial sector. Commissioner Barnier has made many relevant suggestions, which, however, were watered down all too often. He is hoping to have finalised the most important sectors of the financial market regulation by the end of 2013.