The European Central Bank is set to take on oversight powers over all euro-area banks as early as October 2014 after lawmakers backed the plan for a single supervisor in a vote today in Strasbourg, France.
The adoption of the proposals followed a deal between the ECB and the parliament earlier this week in which the Frankfurt-based central bank pledged to disclose details from meetings of its bank-oversight board. Legislators had refused to approve the supervision powers until an agreement on democratic scrutiny was reached.
“It provides for a high degree of accountability of the ECB in the exercise of its tasks under the Single Supervisory Mechanism vis-a-vis the European Parliament as well as adequate safeguards for the protection of confidential information,” ECB President Mario Draghi and European Parliament President Martin Schulz said in a joint statement today.
Euro-area leaders asked the ECB in June 2012 to take up bank-supervisory duties in a bid to help quell the currency bloc’s sovereign-debt crisis by separating the financial woes of banks and nations. The oversight role is the first step in the EU leaders’ plan to create a euro-area banking union, with centralized supervision and crisis management of lenders.
Finance ministers are set to have a first discussion of plans for centralized bank resolution at a two-day meeting beginning tomorrow in Vilnius, Lithuania.
The European Parliament’s vote on ECB supervision “is really a significant step,” Lithuanian Finance Minister Rimantas Sadzius told reporters in Vilnius today.
Draghi said the ECB will do its “utmost” to set up the new oversight regime within one year. “Today marks a real step forward in setting up a banking union, which is a core element of a genuine economic and monetary union,” Draghi said in a statement.
Under the deal struck this week with lawmakers, the ECB will disclose a “comprehensive and meaningful record of proceedings” from meetings of its bank-supervision board, according to a statement from the assembly’s Liberal group.
Separately to the discussions with lawmakers on bank supervision, Draghi has said that the central bank is weighing moves to increase the information it discloses from its monthly meetings to set interest rates, and will make a proposal on minutes later this year.
“Publishing the minutes of Governing Council meetings would be an important element of a richer communication strategy,” Joerg Asmussen, a member of the ECB’s Executive Board, said in a speech in Brussels this week. “In my personal view, the minutes, summarizing the main policy discussions, should include who voted for what, and the reasoning behind that vote,” he said.
According to the legislation voted on today, the ECB should fully take on oversight powers no sooner than one year after the final text of the law is published. Following today’s vote, the only legal hurdle remaining is for the text to be formally endorsed by national governments.
Once the law is published, the ECB can advance practical preparations for its new tasks including hiring staff and renting premises.
The ECB is also preparing a balance sheet assessment of the banks that it will directly oversee, to be completed before it takes on its supervisor role.