Banks, the Parliament-Council agree on a single supervisor

More transparency and power for the Chamber and increasing competency for the European Banking Authority. For the MPs is a “change of democratic control of the financial sector”

The European Council and Parliament reached an agreement on the single supervisory bank mechanism. A key point of the understanding is the larger role of the EU Parliament, who will be given more power in the process of nominating and revoking the president and vice-president of the Supervisory Council. Furthermore, they reaffirmed the principle of equal rights among countries that participate in the mechanism and countries that on the other hand stay out. The negotiators of the Council and Parliament decided to guarantee better access to documents for community banking security authorities (like the ECB) and for European MPs and National Parliamentarians. They increase the responsibilities of the European Banking Authority (EBA), which should conduct evaluations of risk and security (stress-test) on the banks and obtain information on loan institutions. Single supervisory should not be synonymous with standardization: the agreement foresees “establishing a system that maintains the diversity of the banking sector of the EU.” The separation between the function of monetary policy and that of supervision of the ECB was also confirmed. The text of the agreement released yesterday must be approved in plenary session (probably already in April).

“This agreement indicates a turning point in the democratic control of the financial sector,” comments Sven Giegold (Greens), negotiator for Parliament relative to the part that concerns the EBA. This is a “fundamental step towards a real banking union” said Marianne Thyssen (PPE), negotiator for the EU Parliament for the supervisory powers of the ECB. A comparable comment was made by Michael Noonan, Minister of Finance from Ireland, the country hosting the presidency turn at the European Council. “The Single Supervisory Mechanism is the first great step towards a banking union.” Yesterday’s agreement – which must be examined by the member states – therefore reintroduces the permanent save the state fund Esm (European Mechanism for Stability) and the possibility to recapitalize banks. “Congratulations to the European Parliament and Council” arrive from the European Commissioner for the Internal Market and Services, Michel Barnier, for whom this agreement “will contribute to strengthening the single market and guaranteeing financial stability” of Europe.

Renato Giannetti