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BERLIN—Germany’s finance minister wants the new European banking supervisor to limit its focus to major banks whose stability is vital to Europe’s financial security, rather than spread itself too thinly and monitor all of the region’s 6,000 lenders.
Wolfgang Schaeuble’s comments in an article for the Financial Times Friday could lead to a conflict between Berlin and the European Union’s executive Commission, which is to present proposals Sept. 12 on how to put a Europe-wide supervisory system in place.
The EU’s internal market commissioner, Michel Barnier, was quoted as telling German daily Sueddeutsche Zeitung’s Friday edition that the plan is for more than 6,000 banks in eurozone countries to be supervised by the European Central Bank “in close co-operation with national supervisors.”
Schaeuble, however, wrote that “it is crucial that the new system be truly effective.
This, he noted, means it should focus its oversight on those banks that pose a systemic risk. “We cannot expect a European watchdog to supervise directly all of the region’s lenders — 6,000 in the eurozone alone — effectively.”
Lawmakers in the conservative party of Schaeuble and Chancellor Angela Merkel argue that there’s no reason why smaller local savings banks, for example, need ECB oversight.
Barnier, however, was quoted as saying: “We are convinced that all banks must be centrally supervised. Otherwise, serious problems can arise.”
The commissioner added that the plans also call for all banks being helped by the eurozone’s permanent rescue fund to be centrally supervised starting next January. Big banks would be subject to central oversight from July 2013 and the system could be extended to all banks in January 2014.
In his article, Schaeuble didn’t specify when central banking oversight might be introduced. But he said that “setting up such a system will be no simple undertaking and doing so within a reasonable time frame will require not just hard work but also courage, for it implies a big step toward more European integration.”
That, he added, also would make it easier for EU countries that don’t use the euro to take part in the supervisory system.