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Asmussen Says New Bank Powers Mustn’t Risk ECB Independence

July 17 (Bloomberg) -- European Central Bank Executive Board member Joerg Asmussen said while the central bank “stands ready” to act as a supervisor to euro-area banks, the new role must not compromise its independence.

“We will need strict arrangements to safeguard the independence of the ECB’s monetary policy,” Asmussen said in a speech at the European Policy Centre in Brussels today. “Moreover, with the new tasks, higher standards of democratic accountability will have to be fulfilled. We are fully aware of that and stand ready to satisfy them.”

European leaders last month agreed to design a blueprint for the future of monetary union by the end of the year that could include better controls on national budgets as well as centralized bank oversight in which the ECB would play a role. The treaty governing the euro already foresees the ECB supervising banks, should all members of the area agree.

“Carrying out of the new supervisory task will be challenging,” Asmussen said. “But its implementation will be greatly facilitated by the fact that the ECB can count on the central banks of the Eurosystem.”

Supervision would focus on banks within the single-currency region, Asmussen said, adding that “we haven’t made up our minds completely on which groups of banks to cover.”

“There’s a strong case that it’s about stabilizing the monetary union,” he said. “You could use the knowledge you get by supervision to better conduct monetary policy because you know your counterparties better.”

Asmussen also said that unified supervision is “only the starting point” for a proper financial-market union.

“The latter should also provide for common mechanisms to resolve banks and to guarantee customer deposits,” Asmussen said. “This is necessary to break the vicious circle between banks and sovereigns which is at the source of the fragility of the euro area financial system.”

To contact the reporters on this story: Gabi Thesing in London at; Jana Randow in Brussels at

To contact the editor responsible for this story: Craig Stirling at

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