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Europe closer to banking union
Source: Agencies |
September 13, 2012, Thursday
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EUROPE moved a step closer to a banking union yesterday with a plan for the European Central Bank to supervise all eurozone lenders, a cornerstone of closer fiscal integration designed to end years of financial turmoil in the region.
European Commission President Jose Manuel Barroso outlined the proposal in his annual "state of the union" address, laying out a path to further economic integration that he said he hoped would underpin the future of the euro.
The proposed banking reforms, which need to be approved by the European Union's member states, aim to break the link between banks and states, preventing heavily indebted countries being sucked further into difficulty by distressed lenders in need of rescue.
It tackles a core element of the crisis that first struck banks in Europe almost five years ago and escalated into a sovereign debt crisis in 2010.
"The crisis has shown that while banks became transnational, rules and oversight remained national," Barroso told the European Parliament. "We need to move to common supervisory decisions, namely within the euro area."
"The single supervisory mechanism proposed today will create a reinforced architecture, with a core role for the European Central Bank," he said. "It will be a supervision for all euro area banks."
For the plan to work, it will require countries to surrender a degree of sovereignty over supervising their banks.
European Commission President Jose Manuel Barroso outlined the proposal in his annual "state of the union" address, laying out a path to further economic integration that he said he hoped would underpin the future of the euro.
The proposed banking reforms, which need to be approved by the European Union's member states, aim to break the link between banks and states, preventing heavily indebted countries being sucked further into difficulty by distressed lenders in need of rescue.
It tackles a core element of the crisis that first struck banks in Europe almost five years ago and escalated into a sovereign debt crisis in 2010.
"The crisis has shown that while banks became transnational, rules and oversight remained national," Barroso told the European Parliament. "We need to move to common supervisory decisions, namely within the euro area."
"The single supervisory mechanism proposed today will create a reinforced architecture, with a core role for the European Central Bank," he said. "It will be a supervision for all euro area banks."
For the plan to work, it will require countries to surrender a degree of sovereignty over supervising their banks.
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