Under Cypriot clouds a landmark deal on single bank supervisor secured!

by N. Peter Kramer

This creation is a major step towards a banking union that can restore confidence in the European banking system. Restoring confidence in the supervision of European banks couldn’t be more important in bringing stability to Europe. The setting up of the supervisor will also pave the way for the European Stability Mechanism (ESM) to take on the direct recapitalisation of banks.

There will be a stronger role for national parliaments and rights for the European Parliament including the co-appointment and dismissal of the Chair and Vice Chair. A better access to documents both for the EU supervisory authority vis-à-vis banks and also for the EP and national parliaments vis-à-vis the EU supervisory authority.

Other key areas are the strict division of European Central Bank staff between monetary policy and supervision to ensure that the supervisory arm of the ECB is truly accountable; strengthening the European Banking Authority, in relation to the ECB, and also improving its ability to undertake stress tests and obtain information; and establishing a system which will uphold the diversity of the EU banking sector.

The agreement confirms the unanimous position of the Council, agreed in December, on the core balance of rights between participating and non-participating member states and contents participation conditions for Non-Eurozone countries. The European Conservatives and Reformists group (ECR) lead negotiator on the proposal, Kay Swinburne MEP, said she is pleased that her main aims have been delivered: preventing Eurozone nations from caucusing when it comes to rule-making over all EU banks, and ensuring a clear separation between the European Central Bank's supervisory and monetary roles to ensure its independence. In particular, decisions in the European Banking Authority will be made according to a double voting system that will require a simple majority within both Eurozone and Non-Eurozone countries before they can be enforced.

Kay Swinburne continued "the agreement reached today ensures that countries not in the banking union or Eurozone are able to fully participate in and determine decisions that affect their financial and economic interests. This is a powerful signal that it is possible to allow the Eurozone to integrate further without harming the foundation of the EU's single market."

The provisional agreement the Presidency reached today with the European Parliament will now have to be endorsed by all Member States. But it looks that the split between Eurozone and Non-Eurozone member states is clear now!