Germany has proposed giving the Council of the European Union, which represents member states’ governments, the final say in closing some failing banks, a German official said.
The government of Chancellor Angela Merkel has led opposition to a proposal from Michel Barnier, the EU’s financial-services chief, for a Single Resolution Mechanism to handle euro-area bank failures, claiming the plan is on shaky legal ground and could endanger national control of budgets.
In one of the clearest statements of the German government’s position to date, the official said the council, which functions as part of the EU legislature along with the European Parliament, would only need to decide on closures of certain banks, though the definition of which cases would be covered hasn’t been decided.
The proposed resolution authority, along with European Central Bank oversight of euro-area lenders, scheduled to begin in full next year, form the core of an effort to create a banking union that would sever the link between bank and sovereign debt. Prior to assuming its supervisory role, the ECB will conduct a comprehensive assessment of the banks it will later supervise.
Barnier’s plan gives the final say on bank closures to the Brussels-based European Commission, the EU’s executive and regulatory arm. Germany and other countries reject this arrangement, citing potential conflicts of interest for the commission.
Dutch Finance Minister Jeroen Dijsselbloem, who chairs meetings of euro-area finance chiefs, said he’d be prepared to discuss the German proposal.
“The Netherlands prefers that the commission do this,” Dijsselbloem told reporters in The Hague today. “But we can certainly discuss having the Council of the European Union do this on the condition that decisions could be made quickly and effectively. It musn’t be politicized or lead to delays, because resolution decisions must be made quickly.”
Dijsselbloem said the German position could be discussed “in the spirit of compromise.” European finance ministers meet in Brussels next week to discuss Barnier’s plan.
The commission isn’t wedded to being chief decision-maker in the resolution system, Barnier has said, adding that he would welcome a discussion of alternatives. The commission put itself forward for the role because of its reading of the bloc’s treaties.
The German official didn’t specify which group of ministers would make such decisions within the council. EU finance ministers are in charge of legislation regulating the financial industry.
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