MILAN/BRUSSELS, Jan 7: European Central Bank policymakers stepped up their efforts on Wednesday to position the bank for a core role in supervising commercial banks and applying lessons from the credit crunch.

ECB Executive Board member Lorenzo Bini Smaghi said more coordination is needed among European financial supervisory authorities and the ECB could lead the move.

“Clearly more coordination among supervision authorities is needed, particularly within Europe,” Bini Smaghi told Italian daily La Repubblica.

“The European Central Bank could have the leadership of this coordination,” he said.

Bini Smaghi’s comments bolstered remarks made at the weekend by ECB Vice-President Lucas Papademos, who told a German magazine that the ECB, together with other central banks in the 16-nation eurozone, could become the supervisory authority for cross-border banking groups.

Bini Smaghi said coordination was more important than “national needs”, at least in supervising big banking groups, and mechanisms were needed to ensure swift decisions.

“In any case the ECB has to be involved in the supervision of these big groups,” he said.

“The crisis has shown the necessity of taking crucial decisions in a few minutes.

We need coordination mechanisms to allow rapid decisions, taken by a majority and applied in a uniform way,” he said.

Many European governments have been forced to shore up their banking systems in a 27-nation bloc where just 45 big cross-border banks make up 70 per cent of total deposits.

Ireland and Germany were criticised for taking unilateral decisions to reassure depositors amid the credit crunch.

Andrew Large, formerly deputy governor of the Bank of England, said in the Financial Times on Tuesday that a central bank was best equipped to ensure that leverage at banks does not get too high.

“The ministry of finance or treasury is too remote from the intricacies of the market and too close to the political process,” Large said.

The policymakers’ interventions aim to shape the outcome of a high-level EU group headed by a former Bank of France governor, Jacques de Larosiere, on the future of EU financial supervision.

“As usual in this kind of debate it’s difficult to disentangle the turf war and jockeying for position from the debate on substance about which model works best,” said Nicolas Veron, a research fellow at think-tank Bruegel.

“There is a growing recognition that the organisation that we have at European level for cross-border banks is going to change,” Veron said.

Some analysts doubt if EU states would give up significant supervisory powers to a more pan-EU structure.

In the 1990s many central banks like the Bank of England were stripped of banking supervisory powers that were handed to expanded national market supervisors.

The reasoning was that for central banks to be truly independent in setting rates, they must be divorced from day-to-day supervision as a crisis forces a supervisor to work closely with governments and at times bow to political imperatives.

“The credibility of the

ECB is high now but giving it supervisory tasks will put a lot of pressure on it,” Veron said.—Reuters