Sunday, 16 December 2012 16:33
BERLIN: Germany's central bank has serious reservations about the legal framework for creating a broad banking union in Europe, news magazine Der Spiegel reported on Sunday, citing an opinion from lawyers at the Bundesbank.
The report reflects Bundesbank scepticism about a banking union - combining joint supervision of lenders, a scheme to wind down troubled banks and shared insurance of deposits that aims to break the link between ailing banks and state finances.
The Bundesbank was not immediately available for comment.
The Bundesbank has in the past complained about but not been able to block a range of measures designed to tackle the euro zone debt crisis, such as having the European Central Bank (ECB) buy bonds of struggling euro zone member countries. Its views carry weight in Germany and have the potential to influence the political debate in Europe's largest economy.
European Union finance ministers last week agreed to give the ECB new powers to supervise euro zone banks from 2014, embarking on the first step in a new phase of closer integration to help underpin the euro.
But Germany rebuffed calls for more financial risk-sharing in the euro zone on Friday, rejecting a proposal for a fund to help debt-laden countries cope with economic shocks and leaving open who would pay to wind down stricken banks.
After an initial review of results from last week's summit of EU leaders, Bundesbank lawyers found the banking union project lacks "a sustainably sound legal basis", Der Spiegel said.
It cited concerns that bank supervisors' responsibilities remained unclear and new authorities such as a planned arbitration committee between the supervisors and the ECB Council were not sufficiently covered by European law.
ECB policymaker Jens Weidmann, who also heads the Bundesbank, suggested in a magazine interview last week that EU finance ministers should have given the ECB oversight of fewer euro zone banks.
EU ministers agreed on Thursday to hand the ECB authority to police directly at least 150 of the euro zone's biggest banks and to intervene in smaller banks at the first sign of trouble.
Center>Copyright Reuters, 2012