ECB pushes for new bank agency to start next yearNovember 8, 2013 @ 3:16 am
FRANKFURT, Germany (AP) - The European Central Bank is pushing for the quick setup of an agency that can restructure failing banks, saying the new entity can be set up under the existing European Union treaty.
Its stance clashes with that of the EU's biggest member, Germany, which wants to use a network of national agencies instead while waiting for the treaty to be changed to allow the resolution agency. That could take years.
The ECB said Friday in a written opinion that the new agency needs to enter into force by the middle of next year and be fully operational by Jan. 1, 2015.
Coordination between national regulators "has not proved sufficient to achieve the most timely and cost-effective resolution decisions," particularly when operating across national borders, the ECB said.
The new agency needs to be able to move swiftly and decide a bank's fate in a few days, or even a few hours, the ECB said.
The central bank said the agency needs to be operating before the ECB takes over as banking supervisor with powers to declare that a bank is in trouble. The idea behind the restructuring, or "resolution," agency is that it would prevent the cost of dealing with troubled banks from hurting national finances.
The bank restructuring agency is one part of the EU's proposed "banking union." The idea is to move supervision of banks to the EU level _ and away from national supervisors and regulators who can be reluctant to point out troubles at their home banks.
Failed banks were a key factor in Europe's crisis over too much debt. For instance, the cost of bailouts bankrupted Ireland in 2010 and forced it to seek rescue loans from the other eurozone governments and the International Monetary Fund. Banks that continue to operate with strained finances often cannot make new loans to businesses at affordable interest rates, one factor contributing to the eurozone's sluggish growth and high unemployment.
The EU rejected German arguments that the new resolution agency requires a change in the EU treaty. The ECB says recent changes in the proposal mean it can be adopted by the EU parliament and member governments.
(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
Have a Seat
Crystal Mountain says it'll auction off chairs destroyed in a massive avalanche
New radar data shows a Malaysian Airlines Boeing 777 changed course before disappearing
Seattle's most famous gardener gives you the green light
Please login below with your Facebook, Twitter, Google+ or Disqus account. Existing MyNorthwest account holders will need to create a new Disqus account or use one of the social logins provided below. Thank you.