This key vote to create a single supervisor was passed, but it comes with conditions on accountability and governance.
MEPs voting on banking union's first element on supervision are demanding some significant additions which could cause delays to implementation. Other elements of common resolution and deposit guarantee are yet to be discussed and are likely to prove even more contentious.
Central to MEP concerns is oversight for appointments, decisions and actions of the ECB. MEPs want national governments and the European Parliament to have much greater say and right to challenge, including approving and dismissing the supervisory board Chair.
Also of concern is coordination and interaction with the EBA. MEPs want greater power for the EBA to conduct EU-wide stress tests and obtain information on banks and national supervisors. They are concerned that without safeguards the EBA's role will be undermined and ultimately weaken the single market.
Industry concerns include the:
- overall burden of regulations;
- new supervisory structures;
- potential for duplication of information requests; and
- conflicting decisions between supervisors.
There are also growing criticisms that without full banking union, including common resolution and deposit guarantee, that single supervision will create a lack of clarity on accountability for cross-border issues.
Further discussions between the EU and ECB are expected over the coming weeks with agreement sought by the end of June.
The key areas of change approved by Parliament are:
- Stronger accountability of the supervisor, including Parliament's approval of the appointment of Chair and Vice-Chair of the Supervisory Board, and their potential dismissal
- A stronger role for national parliaments, including organising hearings with supervisory board chair and members and requesting written replies from ECB supervisor
- Better access to documents, both for the EU supervisory authority regarding banks; and for the European and national parliaments regarding the EU supervisory authority,
- Attractive participation conditions for non-Eurozone countries, to encourage as many as possible to participate, (thereby reducing the risk of fracturing the single market)
- Strict division of European Central Bank staff between monetary policy and supervision roles, to ensure accountability of the ECB supervisory arm
- Strengthening the European Banking Authority (EBA) in relation to the ECB and improving its ability to conduct stress tests and obtain information from banks and national supervisors. The EBA will also be tasked with developing convergence among national supervisors, while at the same time upholding the diversity of the EU banking sector.
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