Nowotny Says ECB Should Start Supervision With Major Banks First
The European Central Bank should consider focusing only on major lenders when it starts taking on supervision of European banks and only gradually widen the scope, Governing Council member Ewald Nowotny said.
“Taking up such a huge responsibility for European banking supervision needs careful preparation, quality being at least as important as speed,” Nowotny said in a speech in Vienna today. “It may make sense to follow the advice of some of our German colleagues to start with a smaller number of the major European banks to allow for a staggered approach.”
The ECB is due to take responsibility of banking supervision in the euro area and other European countries next year in a first step toward a banking union. It will be overseeing roughly 130 banks with combined total assets of more than 25 trillion euros ($33 billion), Nowotny said.
“With regard to the financial system, a fair amount of stabilization has been achieved,” he said. “But we still see major challenges for the banking sector, and -- especially in Europe -- we still see a struggling economy and overstretched public finances. This is why an accommodative monetary policy stance is still needed.”
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