Central banker tells UK it will benefit from EU banking union

Tim Wallace
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THE NEW single supervisory mechanism (SSM) and banking union of Eurozone lenders will create more certainty and less complexity for British firms and banks dealing with foreign institutions, a top EU regulator claimed yesterday.

If the new rules had been in place before the credit crunch, the crisis could either have been averted or would have been much less severe, European Central Bank vice president Vitor Constancio said.

The proposals include the creation of a single resolution regime to wind down failed banks and a common system of deposit protection across the Eurozone.

Constancio claimed this will end the link between sovereigns and banks as well as reducing the fragmentation plaguing the Eurozone, which stops low rates being passed on to borrowers.

The UK does not want to take part, though some other countries are expected to join those using the single currency.

“Banking union will enhance financial stability in the Europe – and this, more than anything, is what is required for the single market in financial services to thrive,” he said. “I can see only advantages for Britain.”