Wild wild test

22 April 2009 By Pierre Briancon

The EU wants to force staterescued banks to shrink their balance sheets. That’s unrealistic and could push back regional integration as the Bundesbank’s Weber fears. Europe deserves a stronger regulatory response to the crisis than the current commission seems able to provide.

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Axel Weber, the Bundesbank president, said EU competition authorites' insistence on forcing staterescued banks to sell foreign assets and focus on their home markets could harm recovery prospects.

If banks are forced to sell off profitable businesses...I think this creates a problem. ...the probability of a credit crunch in the euro area increases rather than decreases", Weber said in an interview with the Financial Times.

I find it surprising to say the least that European institutions view crossborder operations within the EU as foreign operations. For me, the euro area is the domestic economy, he added in a rare critic of EU authorities.

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