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EC promises eurozone bank union plans in September

European Parliament Flages 480

The European Commission will outline plans for a eurozone banking union under a single supervisor in September, according to its president José Manuel Barroso.

The announcement will be seen as a blow to internal markets commissioner Michel Barnier who earlier this month said he wants to see all 27 EU member states under a banking union by the end of the year.

Speaking in Athens after a meeting with Greek prime minister Georgios Samaras, Barroso said the EC is working “intensively” towards proposals to put the European Central Bank in charge of banking supervision across the 17-member eurozone.

He said: “Giving the ECB the ultimate responsibility for supervision of banks in the euro area will decisively contribute to increase confidence and increase financial stability. The euro area governments and the EU institutions will do whatever is necessary to secure the financial stability of the euro area.”

Last week, the European parliament’s economic and monetary affairs committee chair Sharon Bowles told Money Marketing that Barnier’s EU-wide union was unlikely to come to pass because it would require changes to the Treaty of Lisbon, a move likely to trigger referendums around the continent.

But, as one of the key members in putting together the European parliament’s response to the Commission’s proposal, she may yet prove an ally in Barnier’s and Borroso’s quest for speed in implementing the plan.

She backs the “hybrid model” where, as proposed by the EC, the ECB supervises banks in the eurozone, those outside it continue to be supervised by their central banks and the European Banking Authority acts as the overarching rulemaker and mediator of any disputes.

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