Row brews over powers of EU’s bank watchdog

GERMANY and the European Commission are set for a new row over the powers of the planned body which will have the final say over the fate of broken banks in the Eurozone, with key details of the proposals due to be published today.

The EC wants a centralised European agency to be able to close down troubled banks, and will today reveal its proposals.

But Germany insists that power must be held by national authorities and could stop the proposals becoming law.

“I would strongly ask the Commission in its proposal for a single resolution mechanism to be very careful,” warned German finance minister Wolfgang Schauble.

Despite the growing row European Central Bank official Jorg Asmussen last night called for the banking union rules to be brought in more quickly than planned.

“The European Parliament proposal for bail-in to enter into force in 2016 is an improvement [on a previous deadline of 2019], but January 2015 would be better. Markets will in any case anticipate bail-in earlier,” he said.

It came as leaders at the Eurogroup pushed for more economic reforms in Greece in a continued drive to improve the economy’s competitiveness.

“It is time to step up the momentum of reform in Greece, to support the return of confidence for the sake of growth and job creation,” said EC vice-president Olli Rehn.

Meanwhile the finance chiefs at the Ecofin meeting yesterday approved Latvia’s membership of the Eurozone.

The state’s credit rating was upgraded by ratings agency Fitch to triple-B plus, on the basis that “euro adoption will enhance economic policy coherence and credibility compared with the current exchange rate peg to the euro.”