ECB fights with Germany on EU plan for failing banks

Had to re blog ,
Always the case an independant authority body of the EU always has to have a fight with Germany .
You can’t give control to a independant body then criticise it when it doesn’t do what you want !

Be easier to call the ECB the Bundesbank !

Tony Evans

ECB fights with Germany on EU plan for failing banks.

In a public debate during a meeting in Brussels today, the European Central Bank clashed with Germany over how the European Union will handle struggling banks and whether to create a common place to fund and manage bank failures.

ECB Executive Board member Joerg Asmussen called for creating a central agency and an industry-funded common backstop for handling failing banks by ‘the summer of next year’, when the ECB takes up new supervisory duties.

Asmussen endorses the emerging consensus on depositor preference as part of so-called bail-in rules: “The pecking order would first write down shareholders, subsequently bail in junior creditors, then senior unsecured creditors and only if necessary and as a last resort uninsured depositors”.

However, German Finance Minister Wolfgang Schaeuble said that the EU should not try to create a single resolution agency without amending current treaties.

EU leaders have begun working on a banking union last year, with the aim of breaking the cycle of contagion between nations and their banks. They started by giving the ECB oversight powers and later created a single mechanism for handling bank failures.

Further to this, the Ministers also signalled today a growing willingness to give preference to depositors when assigning losses, putting senior bondholders and other unsecured creditors more squarely in the firing line.


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