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Merkel insists bank supervision must not be rushed
BERLIN: German Chancellor Angela Merkel is digging in her heels on plans for a new European banking supervisor, insisting Monday that they must not be rushed and that she sees no need for joint European deposit insurance.
Creating a banking supervisor is a key part of Europe’s attempts to end its three-year debt crisis, partly because it has to be in place before other measures can be considered.
These include a Europe-wide deposit insurance scheme; a single method for winding down bankrupt banks; and allowing the European bailout fund to directly help banks in trouble, relieving the financial risk such rescues to individual states.
But the European Commission, the EU’s executive, has irked Berlin with plans to have the new supervisor oversee every bank in the eurozone, rather than just the biggest, and to have it start work at the beginning of 2013.
“If it’s Sept. 15 today and we’re just starting the discussion, it is relatively unlikely that, on Jan. 1, a functioning authority will be standing where we don’t even have a decision on the building plans,” Merkel said at her annual summer news conference.
“What has always hurt us in Europe, particularly with the financial markets, is when we have made announcements that in the end couldn’t be implemented,” she insisted. “This must take the time needed to secure good quality.”
Merkel cautioned against rushing the process simply to hasten the day when struggling banks will be able to get aid directly from the (euro) 500 billion ($656 billion) bailout fund, the European Stability Mechanism.
She insisted that Europe must keep to its agreement that the new supervisory system be put in place before the ESM is allowed to help banks directly— “that is the sequence and it is indispensable to keep to it.”
Merkel also balked at the idea of a region-wide depositors’ insurance plan. Germany’s public-sector savings banks and cooperative banks have urged her to block it, arguing it would come at their expense.
The chancellor said she favors harmonizing deposit insurance standards, but “the question of a common deposit insurance does not arise for me, so we don’t need to discuss it at the moment.” -- AP