LUXEMBOURG (MNI) – EU lawmakers are narrowing in on a deal to
finalise how the 27-nation bloc will implement the Basel III
international accord on bank capital rules, EU internal Markets
Commissioner Michel Barnier said Tuesday.

“We are in the home stretch,” Barnier said after a meeting of EU
finance ministers here.

However, Cypriot finance minister Vassos Shiarly, who chaired the
meeting, cautioned that a number of key issues, including the question
of additional capital buffers for systemically important banks, the
degree of flexibility that governments may have, and the question of
liquidity ratios, remain unresolved.

Barnier was also optimistic that Eurozone countries could agree on
a plan for a single banking supervisor by the end of the year, a view
that conflicts with those expressed today by a number of EU finance
ministers, including Germany’s Wolfgang Schaeuble, the Netherlands’ Jan
Kees de Jager, and Sweden’s Anders Borg.

“On all aspects of the debate I believe we are capable, by
collective efforts, to find a dynamic solution and compromise,” Barnier
said. He stressed that national supervisors would remain responsible for
daily supervisory tasks. “Obviously the ECB will not exercise a daily
supervision over 6000 banks,” he said.

Speaking after the same meeting, EU Economic and Monetary Affairs
Commissioner Olli Rehn implied that the technical debate over whether
the European Stability Mechanism should be allowed to assume old problem
assets was in some ways theoretical, because countries opposed to the
idea would have the power to veto such a move since it would have to be
agreed by a consensus of the ESM’s board.

Rehn also said that the EU would speak out at the IMF meeting in
Tokyo this week and at a meeting of G20 finance ministers in November on
the threat posed to EU and world growth by the ‘fiscal cliff’ facing the
US government at the turn of the year.

The EU Economics chief also defended Europe’s emphasis on fiscal
consolidation, citing academic research linking high government debt
with low-growth, and he stressed the important but hard to quantify
effect of ‘confidence’ that consolidation can inspire.

–Brussels Newsroom, +324-952-28374; pkoh@mni-news.com

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