ECB's Asmussen doubts EU banking watchdog ready by January 2013

Mon Oct 1, 2012 1:33pm EDT
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FRANKFURT (Reuters) - The European Central Bank will not rush through "half-baked" plans for a new pan-European banking supervisor, policymaker Joerg Asmussen said on Monday, adding to doubts that the new structure can start as planned in January.

Asmussen, who joined the ECB Executive Board at the start of the year, warned all those who were keen to tap the euro zone's permanent bailout fund (ESM) for direct bank recapitalization - for which the new bank supervision mechanism is a pre-requisite - that the ECB would only settle for a properly constituted set-up.

The proposal calls for the ECB to house the new watchdog.

"It is not enough to put up a new sign at the Eurotower in Frankfurt, which says 'European Central Bank and European Banking Supervision', if nothing has changed substantially yet," Asmussen said in a text for a speech to be delivered in Vienna on Monday.

"That's why it remains to be seen whether we can make the date January 1st, 2013."

Germany's Europe Minister, Michael Link, made similar comments earlier in the day, while his French counterpart also cast doubt on the structure being up and running at the start of 2013.

Germany was a driving force behind the idea of the banking union at an EU summit last June, but has warned of overburdening the ECB with new tasks too soon.

Asmussen added: "I want to make something clear to all those who are angling for a possible direct bank recapitalization via the ESM and are prepared to go with a half-baked solution for the banking supervision: not with us. We won't sacrifice the ECB's reputation for this."

The European Commission announced plans to give the ECB primary responsibility for overseeing the euro zone's 6,000 banks in September, and encouraged the broader European Union to participate in the regime.   Continued...