Oct. 26 (Bloomberg) -- The European Commission is resisting attempts by some national governments to set limits on the European Central Bank’s planned power to supervise all banks in the euro area.
The Brussels-based commission renewed its call for the ECB to have the right to take over tasks from national regulators without having to justify itself, including supervision of banks that haven’t received public aid and aren’t seen as systemically important, according to a document dated Oct. 25 and obtained by Bloomberg News.
The commission is fighting a move to set hurdles for the ECB to assume oversight of smaller banks and those that haven’t received bailouts. An earlier draft of the plan prepared by European Union member states had called for the ECB to present a “reasoned decision” before stepping in to supervise such lenders.
“National competent authorities should be responsible for assisting the ECB on its request,” according to the document. The ECB should be in charge of thrashing out how this cooperation will work, the commission said.
Cyprus, which holds the rotating presidency of the EU, proposed this week that the ECB should only be allowed to take over oversight for such lenders if financial stability is under threat. The ECB would also be required to consult with national regulators and explain its reasoning before stepping in.
EU leaders in June embarked on plans to build a common supervisor as a step toward offering direct bank bailouts from the euro area’s firewall fund. German Chancellor Angela Merkel has said it’s an open question whether European policy makers can meet a self-imposed deadline to transfer oversight powers to the ECB by Jan. 1.
“Talks at technical level are making progress in clarifying issues and working towards solutions, said Stefaan De Rynck, a spokesman for Michel Barnier, the EU’s financial services chief. “Work is on track for a political agreement by end of the year.”