Single Supervisory Mechanism to Commence on 1 January 2013

The BBC reports that EU leaders have agreed to phase in a single supervisory mechanism, under the auspices of the ECB, for eurozone banks during the course of 2013.  However, according to the report, it is not clear whether the ECB will have direct responsibility for all 6,000 eurozone banks – specifically, whether German Landesbanks will continue to be subject to national supervision on a day-to-day basis.

This FT article sees the timetable for implementation as a victory for the group of nations, led be France, which had been pushing for a speedy first step towards banking union.  However, it notes that there is still no agreement as to when the European Stability Mechanism will be empowered to recapitalise troubled banks directly, thus relieving sovereigns of the burden of debt.  The German government insists that this can only happen once the new bank supervisor is established and running effectively.  The ECB itself estimates that this would take between 6 and 12 months.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s