Forex Flash: Eurozone agrees common bank supervisor – Nomura
FXstreet.com (Barcelona) - The Nomura economics team have flagged articles today which report that Europe has taken its first big step towards banking union this morning, as Eurozone Finance Ministers agreed a plan to cede power to a common bank in supervisor in Frankfurt.
The Wall Street Journal reported that ministers said that the ECB should start policing the most important and vulnerable banks in the Eurozone and other countries which choose to join the new supervisory regime next year. The official press release notes "the ECB will assume its supervisory task within the SSM on 1 March 2014 or 12 months after the entry into force of the legislation, whichever is later, subject to operational arrangements".
The Wall Street Journal writes that the ECB will take responsibility for Banks that have at least EUR 30bln in assets, make up more than 20% of their countries GDP or operate in at least two countries. At the very least, ministers said, three banks per member state would come under central oversight. Other banks will remain under the remit of national supervisors. EU officials have insisted that the system was built around a single line of authority, with the ECB setting the day-to-day operating procedures for all supervisors.
Elsewhere, the FT reports that Germany's willingness to give some ground paved the way for a deal that beats the EU's self-imposed year end deadline, but during talks, German Finance Minister Schäuble made plain that one of the key purposes of the reform - to allow common resource in the Eurozones EUR 500bln rescue fund to be injected directly into ailing banks - was out of the question until well into 2014. A clause inserted into the text would allow the ECB to take over supervision of a lender at the request of the ESM which oaves the way for an emergency injection of capital but would require unanimous approval.
They note that the FT feels that the compromise on voting arrangements for setting regulations within the banking union was that a simple majority and a weighted majority would be required for any decision. The paper notes the package will still require approval from the EU parliament and the German Bundestag, a process that could take several months in total.
The team note that to address the rights of non-eurozone countries, both inside and outside of the banking union, a series of complex provisions were included in an attempt to assuage the legal restrictions that prevented non-eurozone members of the banking union holding full voting rights within the ECB. However, they finish by noting that the FT flags that these proved insufficient for Sweden and the Czech Republic, who made clear that they would not join a banking union in the near future.
Eurozone countries eventually dropped objections to UK led demands for a "double majority" principle at the European Banking Authority, the EU agency coordinating the work of national supervisors. The FT writes that this ensures that any EBA decisions are at least approved by a pluraility of countries outside of the banking union - a principle with potentiall wider application as Britain seeks to coexist within the single market with a more integrated Eurozone.
The Wall Street Journal reported that ministers said that the ECB should start policing the most important and vulnerable banks in the Eurozone and other countries which choose to join the new supervisory regime next year. The official press release notes "the ECB will assume its supervisory task within the SSM on 1 March 2014 or 12 months after the entry into force of the legislation, whichever is later, subject to operational arrangements".
The Wall Street Journal writes that the ECB will take responsibility for Banks that have at least EUR 30bln in assets, make up more than 20% of their countries GDP or operate in at least two countries. At the very least, ministers said, three banks per member state would come under central oversight. Other banks will remain under the remit of national supervisors. EU officials have insisted that the system was built around a single line of authority, with the ECB setting the day-to-day operating procedures for all supervisors.
Elsewhere, the FT reports that Germany's willingness to give some ground paved the way for a deal that beats the EU's self-imposed year end deadline, but during talks, German Finance Minister Schäuble made plain that one of the key purposes of the reform - to allow common resource in the Eurozones EUR 500bln rescue fund to be injected directly into ailing banks - was out of the question until well into 2014. A clause inserted into the text would allow the ECB to take over supervision of a lender at the request of the ESM which oaves the way for an emergency injection of capital but would require unanimous approval.
They note that the FT feels that the compromise on voting arrangements for setting regulations within the banking union was that a simple majority and a weighted majority would be required for any decision. The paper notes the package will still require approval from the EU parliament and the German Bundestag, a process that could take several months in total.
The team note that to address the rights of non-eurozone countries, both inside and outside of the banking union, a series of complex provisions were included in an attempt to assuage the legal restrictions that prevented non-eurozone members of the banking union holding full voting rights within the ECB. However, they finish by noting that the FT flags that these proved insufficient for Sweden and the Czech Republic, who made clear that they would not join a banking union in the near future.
Eurozone countries eventually dropped objections to UK led demands for a "double majority" principle at the European Banking Authority, the EU agency coordinating the work of national supervisors. The FT writes that this ensures that any EBA decisions are at least approved by a pluraility of countries outside of the banking union - a principle with potentiall wider application as Britain seeks to coexist within the single market with a more integrated Eurozone.
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