The Europeans finally have agreed on something. There will be one bank supervisor for the region as early as next year. While the decision may be a step forward, it is not entirely clear what it means. Many sovereign nations are unlikely to abandon control over their own financial firms. That means the new agency may be emasculated before it comes into existence. Bloomberg reports:
The European Union will seek to agree on a framework that makes the European Central Bank the main supervisor by Jan. 1, according to conclusions released early today after leaders met at a summit in Brussels. The new system, intended to break the link between banks and governments at the root of the region’s financial crisis, will phase in over the next year and could cover all 6,000 euro-area banks by Jan. 1, 2014.
The supervisor can “probably be effectively operational,” allowing the euro bailout fund to lend directly to banks as soon as 2013, EU President Herman Van Rompuy told reporters. He said finance ministers will design rules for such bank rescues.
However, those finance ministers may be unable to come to a conclusion at all, as has happened with so many other plans to save Europe.
Douglas A. McIntyre