PARIS, Aug 31: The EU Commissioner Michel Barnier said on Friday that eurozone banks would gradually come under the remit of a new common supervisor with a complete shift over for all 6,000 lenders in January 2014.

Barnier is leading preparations for plans for a common supervisor, which was part of a wider agreement on letting the new eurozone rescue fund directly help lenders instead of forcing countries to seek a full bailout.

There are disagreements between the 17 eurozone members as well as in the wider European Union over how fast and to what extent to centralise the current system which relies on national supervisors loosely monitored by the London-based European Banking Authority (EBA).

“We never envisaged a global switchover from one day to the next to direct and integrated supervision,” Barnier, the EU’s internal markets commissioner, was quoted as saying in the French business daily Les Echos. He said any banks which receive support from the European Stability Mechanism (ESM) rescue fund should immediately come under the purview of the new regulator, which is hoped to begin operations on January 1, 2013.

“From that date, theoretically, the direct recapitalisation of banks by the rescue fund will be possible,” said Barnier.

Then the common supervisor would take over responsibility for the largest so-called systemically important banks, and finally all 6,000 eurozone banks from January 1, 2014.

The EU Commission chief Jose Manuel Barroso is to present the proposals on September 12, with the European Central Bank expected to be handed the bank supervisor role. But the Commission and Germany appear to still differ on the scope for the bank supervisor.

German Finance Minister Wolfgang Schaeuble said “we cannot expect a European watchdog to supervise directly all of the region’s lenders — 6,000 in the eurozone alone — effectively.” Schaeuble called this “common sense”, although critics charge that Germany is seeking to protect its regional banks.

Barnier noted that “many problems have been caused in recent years by non-systemic banks, like Northern Rock, Dexia and Bankia.” The 2007 collapse of mortgage lender Northern Rock sparked Britain’s first bank run in modern history, while Dexia has forced France and Belgium into two bailouts and Bankia’s problems have pushed Spain to seek up to 100 billion euros to rescue its banks.

Barnier said, however, that for functions that do not impact on financial stability, such as consumer protection, national regulators would be left in charge. In an interview with a German newspaper he showed more flexibility on this question.—AFP

More From This Section

ANALYSIS : Hanging regulators by a thread

One of the many legacies inherited by the Nawaz government from the Zardari rule is ‘acting’. Not meaning...

Sindh millers raise flour prices

The rate of flour has been raised to Rs38 per kg from Rs37 per kg, and the prices may go up further in the coming days.

Dar orders framing of agriculture policy

ISLAMABAD: Finance Minister Ishaq Dar on Saturday tasked the Ministry of National Food Security and Research to...

Stamp duty collection up

KARACHI: The Sindh government’s income from stamp duty surged by Rs586 million during July-March 2014 to Rs3.9...


Comments are closed.
Explore: Indian elections 2014
Explore: Indian elections 2014
How much do you know about Indian Elections?
How much do you know about Indian Elections?
Cartoons
E-PAPER
Front Page