(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own)
By Olaf Storbeck
LONDON, Dec 11 (Reuters Breakingviews) - German officials
discussing the euro zone's banking union these days insist they
prefer thoroughness over speed. External observers easily
mistake this insistence as an attempt to procrastinate. However,
concluding that Germany is trying to derail the project by
delaying it indefinitely is a misconception.
Angela Merkel may not be keen on a pan-European deposit
insurance scheme, which would be political suicide in Germany,
but she does want the common supervisor. She just wants one
tailored to German interests.
With gritted teeth, Berlin may be willing ultimately to
accept the limited joint liability that comes with a banking
union. However, it doggedly insists on mutual control in return.
This is the core reason why it opposes the idea that the new
watchdog should immediately take care of all banks in the
currency area. Berlin is not just trying to please German
savings banks' lobbyists. It is driven by the fear that an
instant remit to supervise all 6,000 euro area banks would in
fact make the supervisor powerless. However, a compromise could
be reached on the scope of its powers, at least at the initial
Finding common ground on the internal ECB's governance will
be more difficult. Unlike most other European countries, Germany
adheres to a tradition of keeping central banking and banking
supervision apart. The orthodox view on monetary policy sees the
fight against inflation as the sole remit of a central bank.
From this perspective, the idea that the ECB's governing
bodies could overturn a decision of a national banking
supervisor is hard to swallow. Even worse, the idea that the
ECB's interest rate policy could be driven by concerns about the
An independent banking supervisor within the ECB requires a
change of the bank's statute which would necessitate a treaty
change that Merkel wants to avoid for the time being. Most
likely is a compromise that allows a makeshift start within the
current ECB's mandate, but stipulates a change in the future.
Berlin's insistence on proper legal foundations might appear
obstinate from a mere economic perspective. Yet the question of
how supervisory power will be legally transferred to the ECB is
of utmost important for the survival of the project. German
anti-euro diehards will definitely go to the Constitutional
Court, which could easily wreck a hastily concocted framework.
Just think of the European Stability Mechanism, the euro bailout
fund. If it had not been legally watertight, it would no longer
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(Editing by Pierre Briançon and David Evans)
Keywords: BREAKINGVIEWS GERMANY/
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