FRANKFURT (MNI) – Country voting shares on questions of bank
supervision under the European Central Bank will depend on who is liable
for resolving banks under the central bank’s remit, ECB Executive Board
member Peter Praet said Monday.
Speaking on a panel during Euro Finance Week in Frankfurt, Praet
said whether or not there was a mutualization of risk would affect how
much influence each country had over supervision under the ECB.
Praet did not say whether or how much money banks themselves should
be asked to contribute to a resolution fund under the ECB, but he said
it was critical that this issue be clarified.
“For me it is a big issue when you discuss about voting …to see
at the end of the day, when things go wrong, whose taxpayer money we are
talking about,” Praet said. “If you have a mutualization of risk, then
it will be different in terms of voting.”
ECB Governing Council member Jens Weidmann earlier Monday said
voting rights should be based on the capital shares of ECB members,
given that taxpayers from larger countries would take on more of the
risk.
Praet reiterated there must be a clear separation between the
central bank’s monetary policy role and bank supervision. He
acknowledged that the legal basis for how decisions are taken under the
ECB still had to be “clarified,” along with a series of other
technical questions, before the ECB could take on its new role.
Given the outstanding issues, Praet said it would be “extremely
challenging” for the ECB to take up its new supervisory role at the
start of 2013, Praet said.
More generally, Praet said placing bank supervision under a central
bank could help it better understand the monetary transmission mechanism
as well as the condition of banks under its control. This could help
with a central bank’s exit from non-standard policy measures as banks
must be in good condition before an exit can take place, Praet said.
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— Frankfurt bureau: +49 69 720 142; email: frankfurt@mni-news.com —
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