EU finance ministers agree on bank oversight

PanARMENIAN.Net - European Union finance ministers reached an agreement to create a single supervisor for their banks — one of the most significant transfers of authority from national governments to regional authorities since the creation of the euro currency, The Associated Press reports.

Under the deal, banks with more than €30 billion ($39 billion) in assets supervised or those that represent a significant proportion of their national economies will be placed under the oversight of the European Central Bank.

The deal gives the ECB broad powers, including the ability to grant and withdraw banking licenses, investigate institutions, and financially sanction banks that don't follow the rules.

"It's real progress that opens up interesting possibilities," said French Finance Minister Pierre Moscovici, without giving a specific date for when the first banks could seek direct aid.

Concerns ranged from which banks would be covered to how the ECB would manage to insulate its monetary responsibilities from the new powers to how the deal would affect EU countries that chose not to submit their banks to the ECB's oversight.

Countries that don't use the euro worried their voices in the body that creates banking regulation — the European Banking Authority — would be drowned out by the new euro-machine, particularly since countries with other currencies can opt into the supervision.

The EBA sets all of the rules that govern EU banking, and Britain, in particular — a non-euro country with Europe's largest banking sector — was nervous that the new supervision would mean all the banks under the ECB would vote together at the EBA, effectively steamrolling everyone else.

Ministers reached a compromise that ensures that measures can't pass in the EBA without at least some support from countries outside of the ECB's supervision.