Sharon Bowles MEP warns EU leaders of piecemeal approach to Single Banking Supervision

Ahead of the European Summit taking place in Brussels, Sharon Bowles (ALDE, UK), chair of the European Parliament's Economic and Monetary Affairs committee called on EU leaders to give the necessary care and foresight to enable the banking union proposals to be fully functional.

Sharon Bowles said:

"When the Euro was created European Leaders failed to put in place steps towards political union. We are now having to put these together under crisis conditions. Assumptions made about how the Euro would operate have not held up, circumstances have forced Member States to stand behind one another which was not envisaged. Creating a single supervisor will be no different: it is mutualising risk. Indeed that is why it would be far better for the backstops to be put in place at the same time. Bank debt is three times sovereign debt, so it is no small thing that we are doing.

"We have a proposal for single supervision on the table but no common depositor insurance, coupled with back-peddling on direct recapitalisations of banks via the ESM. Countries that participate need to be honest with their citizens about the profound consequences of these moves. In practice they will have to pool the risks and deposit insurance of the banking system. These moves are coming now to help shore up the Euro and break a vicious cycle of sovereign debt and bank stability through pooling of resources. It simply does not work without that pooling, indeed that would be forced whether legislated or not.

"It is also essential that the ECB is fully accountable and demonstrates a duty of care to the single market. The European Parliament will be working to ensure the ECB respects fundamental freedoms and the composition of its staff reflects gender diversity. We will also need to embed procedural fairness, as there will be a need to have speedy rights of appeal and controls around investigation powers to ensure proportionality.

"If the supervision is to be funded by a levy on industry, then high standards of audit and value for money will be needed. The European Parliament - and if no backstops, then also national Parliaments - will need powers to hold hearings and conduct inquiries themselves or set up independent inquiries.

"To compliment this the EBA will have to operate fairly and without discrimination between Eurozone and non-Eurozone countries. The Treaties require no less. I am concerned about the role of international banking too. The majority of this is at present outside the Eurozone and branches within the Eurozone are also left under national supervision.

"Squaring the circle on all these issues will not be easy, but creating a quick fix system of Eurozone supervision without the mutualised backstop has dangers of its own.

"Concerning proposals to have a fiscal capacity, the economic and monetary affairs committee voted this week to have a strengthened European commissioner or the creation of a European treasury office, both of which must be linked to adequate means for democratic accountability and legitimacy.

"I myself have also long promoted short term bills, of limited time and quantity, as an interim measure to provide time to build the measures that require Treaty changes."

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