European Central Bank Governing Council member Ewald Nowotny said it won’t be possible for the central bank to begin supervising euro-area banks before the middle of next year.
“Quality comes before speed,” Nowotny, who heads Austria’s central bank, said in Tokyo today. “Realistically that means that on Jan. 1, 2013, the logistical foundations will be in place. Operationally, it won’t be possible before the middle of 2013.”
European leaders in June agreed to hand the Frankfurt-based ECB powers to oversee all euro-area banks as part of a so-called banking union that would unlock joint recapitalization funds for the region’s ailing lenders. While leaders set a start date of Jan. 1, 2013, the ECB is pushing for more time.
Nowotny said the economic outlook for the euro area has worsened, as reflected in a report published by the International Monetary Fund this week.
“Overall, we see a deterioration of the global economic outlook,” he said. “Within the euro area, we see a divergence between south and north. That means, for the ECB as central bank for the euro area, it won’t be easy to set policy.”
Nowotny also said he sees no need to change ECB interest rates at the moment, with inflation expected to drop below the central bank’s 2 percent limit next year.
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