The new bank EU supervisory structure will do away with "biased national practices", but the system for dealing with troubled banks must be ambitious, too. "Banking union needs two legs to be strong", said European Central Bank Executive Board member Sabine Lautenschläger told the Economic and Monetary Affairs Committee on Monday, as she presented her credentials to become Vice-Chair of the ECB-led EU bank supervisor.
After the hearing the committee voted to recommend Ms Lautenschläger for the post. This recommendation will be put to vote by Parliament as a whole on Wednesday.
MEPs quizzed Ms Lautenschläger extensively on the single bank resolution mechanism and its related fund, which are the last step to complete a banking union. They also asked her views on the upcoming bank stress tests and "asset quality review", and on the best ways to ensure that the bank supervisor is democratically accountable.
Winding up banks
Ms Lautenschläger said she regretted the use of an intergovernmental method to set up the EU bank-financed fund for assisting troubled banks, although she was ready to "accept some compromise". However, disputing the claims of some EU countries that constitutional problems necessitated an intergovernmental approach, Ms Lautenschläger said that she could see no legal reasons for this, but rather political ones.
Crucial bank tests
The stress tests and asset quality review were crucial to unearth any potential problems and shed light on which banks need recapitalising, Ms Lautenschläger said, adding that it was only through such tests that banks could become credible again and resume lending to the real economy.
Accountability and independence
Ms Lautenschläger said that the supervisor's accountability and separation from the ECB's monetary arm would be ensured, primarily thanks to Parliament's additions to the rules.
Finally, she assured MEPs that the supervisor would be able to keep tabs on banks not under its immediate control. A specific director general would be entrusted with supervising the national supervisors and rules had been laid down for determining which draft decisions national authorities would be automatically required to pass on to the single supervisor.