“EU banking union is a good idea” – BOWLES

Following calls from EU Commissioner, Olli Rehn, and President of the European Commission, José Manuel Barroso, for the EU to establish a "banking union", Sharon Bowles MEP, who chairs the European Parliament's Economic and Monetary Affairs Committee, has said that an EU banking union "is a good idea".

Speaking on Newsnight Ms Bowles said:

"I think there are elements of a good idea in the proposed EU banking union. I think that one of the things it recognises is that banking supervision has to take account of what monetary policy is, so to have the ECB involved in supervision of Eurozone banks and therefore taking account of Eurozone monetary policy in that supervision is a good idea.

"The parallel to that is of course that it would mean that in the UK the Bank of England would be able to continue to have some adjustment in banking supervision in line with the policies that we were setting.

"There is a lot more we would have to do however. Indeed, there is concern as to whether Germany would have all its banks in the banking union as German policymakers tend only to talk about the largest banks."

Sharon added:

"The UK would have to get the balance right in the model of banking union I envisage, where the European Central Bank does the actual supervision, or high-level supervision of the banks.

"There would still be the European Banking Authority, which is in London, and that would be looking after the Single Market side of things because we would still have common rules about our financial services industry being able to have passports into doing business in other European countries. Indeed, that is not going to stop - we would still have the EBA as the referee for that - but we would have to make sure that the voting rules changed so that the Eurozone did not always outvote everybody else, but I think that could quite easily be done.

"When it comes to market infrastructure - if you are operating in Euros it has been said by the ECB before that they want everything cleared in the Eurozone. That is not what they do in the US with dollars and so I think we would quite rightly demand that there would not be any discrimination of that kind. Indeed, that would be the single most important thing for the City."

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