FRANKFURT (MNI) – Current EU presidency holder Cyprus has drawn up
a proposal that would give more rights to EU states inside and outside
an eventual banking union, limiting the European Central Bank’s power
and giving more influence to those nations with bigger banking sectors
or larger populations, the Financial Times reported on Tuesday.
Citing the leaked text, the FT added that the proposal still would
allow the single supervisor legal authority over all 6,000 Eurozone
banks, a point that is likely to put it at odds with Berlin, which
insists that only larger banks be covered.
Other options under discussion include ways for non-Eurozone
banking union members to ignore ECB decisions if the central bank’s
Governing Council were to overrule proposals by the banking supervisory
board; the ability to tighten bank lending rules without prior ECB
permission; and the possibility of giving non-Eurozone members more
influence within the European Banking Authority, so that the ECB would
not dominate voting on technical rules, the FT said.
Earlier this week, Bundesbank President Jens Weidmann called for
countries taking on greater financial risks to be given a larger say in
bank supervisory decisions. “Given that such decisions also could entail
fiscal costs, a voting weight based on capital shares would make sense,”
he said.
With the Cypriot proposal requiring approval by all members, it is
uncertain whether sufficient backing could be obtained, the FT said. The
business daily also noted the potential concerns of smaller countries
and some European officials that changing voting weights to favor larger
states could mean that national agendas would hamstring the single
supervisor.
— Frankfurt bureau: +49 69 720 142; e-mail: twailoo@mni-news.com
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