Banking hydra

5 December 2012 By Pierre Briançon

All the differences between France and Germany on the euro zone common banking regulator can be surmounted by compromises. The main questions are how long it will take to find them, and whether the ECB will be energetic enough to overcome the inertia of 17 national regulators.

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The European Central Bank on Dec. 5 urged the European Commission to come up with a plan for a central mechanism to wind down banks in order to assure the euro zone’s financial system functions even if some banks are in trouble.
The resolution scheme is one of three pillars that form the banking union that aims at underpinning lenders and the euro currency. The other two are a new banking supervisory body and a combined means of deposit protection to prevent bank runs.
“The ECB calls on the Commission to urgently present a separate proposal for an independent European Resolution Mechanism, including aspects of a common European Resolution Fund,” the ECB said in a legal opinion.

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