EU ministers to agree new bank supervision system
By Bryan McManus, AFPLUXEMBOURG--EU finance ministers prepared Tuesday to take a key step towards a new bank regulatory framework with final clearance of a single supervisor regime for the eurozone.
October 16, 2013, 12:11 am TWN
“We are set to finally approve the Single Supervisory Mechanism (SSM) today,” Lithuanian Finance Minister Rimantas Sadzius said.
Once approved, the SSM will formally “enter into force in November next year,” Sadzius said, as he arrived for a meeting of all 28 European Union finance ministers.
The SSM was originally supposed to start early next year but the timetable slipped amid sharp differences over its precise role and especially over how it would relate to non-euro countries.
Non-euro Britain is home to the European Banking Authority, which is supposed to draft the rules for all banks in the EU, while the SSM is to be run by the European Central Bank.
To ensure that the 17 eurozone members did not out-vote the 11 non-euro members also grouped in the EBA, London won agreement in December that there would have to be a “double majority” in both camps for any action.
London has since won fresh assurances that this would be the case, clearing the way for the SSM.
ECB executive board member Joerg Asmussen said this means “we can now start the real work — hire people, rent a building ... all the practical things to be ready to start working in one year.”
The SSM is to be complemented by a Single Resolution Mechanism to close failing banks and a Deposit Guarantee regime to protect savers.
Combined, this will provide the comprehensive, single regulatory framework meant to prevent taxpayers having to fund the disastrously expensive bank bailouts which led to years of austerity and recession in the eurozone.