Monday, November 19 16:56:35
European Union countries will consider bending to German and British demands to soften the power of the ECB in supervising banks to get agreement on banking union, according to a document obtained by Reuters.
After three years of piecemeal crisis-fighting, European countries are attempting to agree on a banking union to lay a cornerstone of wider economic integration and protect the euro.
It is designed to unify the bloc's response to problem lenders but the reform is deeply divisive and has prompted fears across Europe, from Berlin to London, that the new construct will give the ECB too much power at the expense of national regulators.
Now diplomats from Cyprus -- which holds the rotating EU presidency and is seeking to broker a compromise -- have suggested changes to break a logjam in talks and make the plan more acceptable, in particular, to sceptical countries outside the euro such as Sweden and Poland.
The proposal, dated November 16, recommends a structure that will make it possible for countries outside the euro who join the scheme to exempt themselves from decisions taken by the European Central Bank, although that could result in their expulsion from the banking union.
"The non-euro participating Member State may notify the ECB that it will not be bound by that decision," officials write. "The ECB shall then consider the possible suspension or termination of the close cooperation."
"They are moving towards a way to accommodate non-eurozone countries and also trying to give the national supervisory authorities more power compared to the ECB," said one official, familiar with the compromise, which will be discussed by officials negotiating a banking union on Tuesday.
Diplomats will also consider a suggestion, backed by the Netherlands and Luxembourg, to modify one of the most significant powers the ECB would receive under the new regime.