EU Parliament threatens to delay ECB bank supervision

Reuters

By Claire Davenport

STRASBOURG, France (Reuters) - The European parliament could delay new rules allowing the European Central Bank to supervise banks, a lawmaker said on Tuesday, flagging a potential hitch in one of the bloc's flagship financial reforms.

The threat was made as the European Union's legislature, led by its president Martin Schulz, demanded that the ECB be more accountable to EU lawmakers in its new role, a push that is being resisted by ECB President Mario Draghi, members of parliament say.

The discussion paper between the two sides, obtained by Reuters over the weekend, shows that the ECB is resisting the parliament's draft requirements, among other issues, on detailed minutes of meetings on banking supervision, offering to provide "summaries" instead.

That is based on concerns at the bank that the sensitive information contained in the minutes might become public. Draghi has also underlined the importance of confidentiality for central bankers' independence of judgement not to be undermined.

If the row continues, however, it could delay the starting date for the ECB to monitor banks, part of changes aimed at preventing a repeat of the banking turmoil that started in 2007 and spiralled into a crisis of confidence in governments and the euro.

Members of the European Parliament had been due to sign off on the creation of this new supervision role on Tuesday - an important first step towards the long-awaited 'banking union' to police banks and jointly tackle their problems.

In order to raise pressure on the ECB to make concessions, such as revealing details about the future supervisor's workings, lawmakers postponed their vote until Thursday.

Sven Giegold, a German Green party lawmaker involved in the negotiations, signalled that an even longer delay was possible.

"The parliament threatens to postpone the vote if it is an unsatisfactory result," he said, commenting on talks between Schulz and Draghi in an text message to Reuters.

Draghi cancelled a trip to the parliament's Strasbourg meeting this week as he sought a compromise with the body's President. The two men have had several telephone calls in the last two days, an official close to Schulz said.

ROOT CAUSES

While any delay would have no immediate impact on how European banks operate, but would be a sign of Europe's struggle to take action on the root causes of the euro zone's debt and financial crisis.

Speaking in Paris, the head of the International Monetary Fund, Christine Lagarde, underscored the desire to see fast progress.

"We very much think of the euro area as a beautiful ship that has been built, nurtured .. for the soft seas, but which is not yet completely finished for the rough ones," said Lagarde, who was French economy minister between 2008 and 2011.

"A lot has been done in relation to banking union. If I have a message today it is that particular part of the ship needs to be finished, needs to be completed and speed is of the essence."

The European Parliament's over 750 members represent over 500 million citizens and are eager to gain more oversight into how Europe's banks are supervised as they face elections in May next year.

"While the parliament understands the ECB's well founded concerns about its rule of procedure and the stability of financial markets, members would like to have proper means to ensure democratic scrutiny," an official close to Schulz said.

(Reporting By Claire Davenport; additional reporting by Ingrid Melander in Paris; editing by John O'Donnell)

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