EUROPEAN Central Bank (ECB) board member Benoit Coeure argued in favour of limiting Eurozone nations’ discretion over new bail-in rules during a speech yesterday.
Coeure said: “The degree of discretion national resolution authorities will have in applying the bail-in rules... in my view should be as constrained as possible.”
Some leaders have dragged their feet on specific rules, with the process delayed by the recent elections in Germany.
Banking union plans are politically unpopular in Germany, making unconditional support for a union more difficult.
In April, Merkel stressed that she did not want to see Cyprus-style bail-ins become a normal feature of the Eurozone, saying that they would not work as a universal rule.
Earlier this month, Deutsche Bank research suggested that the draft recovery and resolution directive was too discretionary: “It has many sensible elements that will remove some uncertainty and strengthen market discipline. However, it leaves member states with too much discretion, making competitive distortions likely.”
Coeure stressed the importance of continuing to push for the union: “Creating an efficient mechanism to swiftly resolve insolvent banks is a crucial step towards making the costs of tackling bank crises less onerous for taxpayer.”