* Nowotny sees banking quality control role for ECB
* Continued role for local regulators at national level
* Sees Austrian inflation falling in near future (Adds details on national banking regulators, Austrian economy)
VIENNA, July 2 (Reuters) - The European Central Bank is unlikely to become the supervisor of all euro zone banks when the ECB’s enlarged role in a more integrated banking system in the currency union takes shape, ECB Governing Council member Ewald Nowotny said on Monday..
Euro zone leaders pledged to create a single banking supervisor for euro zone banks based around the ECB last week in a landmark first step towards a European banking union that could help shore up struggling members in the bloc.
Details of the plans remain sketchy, however, with key elements such as how much power the ECB will have and crucially whether it take decisions on closing down troubled banks, still to be clarified.
“I don’t think it’s realistic to build the ECB up into a single, unified bank supervisor of all of Europe’s thousands of banks... but we will find a sensible solution in terms of a division of labour,” Nowotny told a news conference.
“In any case, the local overseers, the local regulators, would make national decisions, but international quality control could fall to the ECB,” Nowotny said.
ECB Executive Board member Joerg Asmussen said in May one option was to supervise the euro zone’s 25 or so largest and systemically key banks, while smaller banks would remain under the oversight of national regulators.
In his comments, Nowotny also broadly welcomed the results of last weekend’s European Union summit, at which EU leaders agreed to bend aid rules to shore up banks and bring down borrowing costs for stricken members like Italy and Spain.
“As a whole, one can say that the summit brought positive results,” he said. “What is important is the principle that there should be no help without conditions.”
Nowotny, who is also the governor of Austria’s central bank, spoke at the International Monetary Fund’s presentation of its annual report on Austria in which it identified further financial stress in the euro zone as the greatest risk to the country’s economy in the short term.
Like the IMF - he said he also expected Austria’s inflation to fall in the foreseeable future, but he did not share the IMF’s downbeat assessment of Austrian banks’ exposure to central and eastern Europe.
The IMF said in its report the fundamentals of the Austrian economy were relatively favourable, although it said they needed to be strengthened further in light of the euro crisis and the legacy of “overly ambitious” banking expansion eastwards.
“We do not share this view,” Nowotny said. “As the Austrian Central Bank, we consider the expansion of the Austrian banks to central and eastern Europe as a success story.” (Reporting By Georgina Prodhan; Editing by Jeremy Gaunt)