Franco-German rift threatens plan for banking union

Tue Dec 4, 2012 9:46am EST
 

By John O'Donnell and Robin Emmott

BRUSSELS (Reuters) - Germany and France clashed publicly on Tuesday over plans to put the European Central Bank in charge of supervising banks, deepening a dispute over the scope of ECB powers that threatens to derail one of Europe's boldest reforms.

With time running out to meet a pledge to complete the legal framework for an EU-wide banking union by the end of the year, Germany's Wolfgang Schaeuble told a meeting of EU finance ministers he could not support a plan that would give the ECB the final say on supervision.

France's Pierre Moscovici and the ECB protested against any watering down of a plan central to Europe's response to a five-year banking crisis and which promises to unify the way it deals with problem lenders, ending a previously haphazard approach.

"The right of the last decision cannot be left to the ECB Governing Council," Schaeuble told the meeting in Brussels, in comments broadcast to reporters.

There could be no deal unless national supervisors had responsibility for most banks, he added.

"A Chinese wall between banking supervision and monetary policy is an absolute necessity," he said, also voicing skepticism that an independent central bank such as the ECB should even take on the tasks of supervision.

Moscovici countered that EU leaders, who had given finance ministers responsibility for drawing up a supervisory framework, had placed the ECB at the center of their vision.

"We have no mandate for a dual system of supervision, which would call into question the existence of a single system for some banks," said Moscovici, conceding after the meeting that their differences were difficult to hide.   Continued...

 
The Euro currency sign is seen next to the European Central Bank (ECB) headquarters in Frankfurt November 6, 2012. REUTERS/Lisi Niesner