Spain and France push for reg­u­la­tor

Europe

Austin American-Statesman - - BUSINESS - B

reg­u­lar monthly meet­ing Tues­day, Wolf­gang Schauble, the Ger­man fi­nance min­is­ter, re­fused to sup­port one of the key de­mands of Bri­tain — far-reach­ing changes to vot­ing pro­ce­dures on an­other bank­ing body, the Euro­pean Bank­ing Author­ity, to en­sure that lenders based in Lon­don con­tinue to be gov­erned by the Bri­tish government.

Schauble also un­der­lined his con­cerns that plac­ing so much su­per­vi­sory power with the ECB could lead the cen­tral bank to com­pro­mise its de­ci­sions on mon­e­tary pol­icy.

“In the long run, you will dam­age the in­de­pen­dence of the cen­tral bank,” said Schauble, who added that so­lu­tions still needed to be found to ad­dress the is­sue.

As the pub­lic de­lib­er­a­tions drew to a close, fi­nance min­is­ters planned to re­con­vene Dec. 12.

Ger­many has warned re­peat­edly that rush­ing ahead with cre­ation of the sin­gle su­per­vi­sor would risk cre­at­ing ad­di­tional reg­u­la­tory loop­holes in Europe. And the Ger­man domestic bank­ing sec­tor, in par­tic­u­lar lo­cal sav­ings banks, or Sparkassen, has re­coiled at the prospect of more rig­or­ous su­per­vi­sion by the cen­tral bank.

“I think it would be very dif­fi­cult to get an ap­proval by the Ger­man Par­lia­ment if you would leave the su­per­vi­sion for all the Ger­man banks to Euro­pean bank­ing su­per­vi­sion,” Schauble said. “No­body be­lieves that any Euro­pean in­sti­tu­tion will be ca­pa­ble to su­per­vise 6,000 banks in Europe.”

That is not the view of Spain and France, seek­ing to speed cre­ation of the new reg­u­la­tor and give it a broad man­date, and Span­ish and French min­is­ters warned Tues­day that foot-drag­ging could prompt a re­turn of acute fi­nan­cial pres­sures in the euro area.

“If we are not able to de­liver in the dates we have com­mit­ted, this will not be neu­tral in terms of the sta­bil­ity of the mar­kets,” Luis de Guin­dos, the Span­ish econ­omy min­is­ter, warned. That sen­ti­ment was echoed by French fi­nance min­is­ter Pierre Moscovici, who said es­tab­lish­ing the sys­tem was “es­sen­tial to solve the euro cri­sis.”

French of­fi­cials have stressed the need for a sys­tem that cov­ers all euro-area banks rather than plac­ing them mainly un­der na­tional reg­u­la­tion with only oc­ca­sional in­ter­ven­tion from the cen­tral su­per­vi­sor.

They have warned that any sud­den in­ter­ven­tion by the ECB into the af­fairs of a bank un­der na­tional reg­u­la­tion could raise alarm among in­vestors and de­pos­i­tors and even lead to bank runs.

For Spain, stricter su­per­vi­sion was sup­posed to be the con­di­tion for us­ing Euro­pean funds to bail out its trou­bled banks di­rectly and a way to avoid ac­cu­mu­lat­ing more sov­er­eign debt.

But Ger­many is the big­gest con­trib­u­tor to the bailout funds, and es­tab­lish­ing the sys­tem could oblige Chan­cel­lor An­gela Merkel to dip into that pot be­fore na­tional elec­tions in Ger­many in Septem­ber. Such aid could be an elec­tion is­sue be­cause Ger­man ci­ti­zens have grown weary of paying most of the bill for bailouts, and they are wary of us­ing more money to help banks in vul­ner­a­ble South­ern Euro­pean coun­tries.

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