Excerpt:
The European Union’s executive arm is heading for a showdown with
Germany over its blueprint for shuttering or restructuring failing
banks, a plan intended to complement the European Central Bank’s
oversight of lenders.
Michel Barnier, the EU’s financial-services chief, will unveil the
European Commission’s proposal for a single bank resolution mechanism
today in Brussels,
a day after German Finance Minister Wolfgang Schaeuble urged restraint if the bloc is to avoid conflicts with its basic laws.
“I would strongly ask the commission in its proposal for an SRM to be
very careful, and to stick to the limited interpretation of the given
treaty,” Schaeuble said yesterday.
“We have to stick to the given legal basis, as otherwise we risk major turbulence.”
EU leaders last month reiterated their support for setting up the
resolution mechanism as an integral part of a planned banking union,
without specifying how it should work.
At issue is how much authority the new European entity would possess,
and what recourse national governments would have to dispute its
decisions.
“From a political point of view, the conferral of a power to wind up
banks on the commission is arguably the greatest transfer of sovereignty
in the history of the EU and points towards a fiscal,
as well as economic and monetary, union,” Alexandria Carr, a lawyer in the London office of Mayer Brown, said by e-mail.
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