ROPEAN banking union threatens to cause a split in financial supervision between Eurozone states and those outside the single currency, the continent’s leading industry regulator said yesterday.
The comments came after German Chancellor Angela Merkel had sought to talk down divisions between her country and France over the implementation of a banking union.
European leaders have agreed that a single banking watchdog must be formed as a pre-condition to allowing Eurozone rescue funds to directly inject cash into struggling lenders.
Yet Andrea Enria, head of the European Banking Authority, warned yesterday: “We risk a polarisation... between the euro area, with single rules and supervisory practices, and the rest of the EU, which would operate with a still wide degree of national discretion in...applying the single rulebook.” Policymakers could struggle in “finding the right glue to keep the single market together,” she added.
Meanwhile politicians from Germany’s ruling coalition want the European Central Bank’s (ECB) planned new powers to apply only to systemically-relevant or cross-border institutions, according to a copy of their proposals obtained by Reuters.
The government’s members of parliament also reject proposals for cross-border bank deposit guarantees, which they want to remain the responsibility of individual states.
Merkel said that she would continue negotiations with French President Francois Hollande this weekend. “We have the task of finding solutions that are good for Europe,” Merkel said, saying she enjoys a “trustful” relationship with Hollande.