BERLIN, Sept 12 (Reuters) - The European Central Bank must carry out a tough balance-sheet test of the euro zone’s 130 most important banks before it becomes their supervisor, ECB governing council member Klaas Knot was quoted as saying on Thursday.
Before taking over as the region’s main banking regulator in 2014, the ECB will analyse lenders’ balance sheets and conduct tests to measure their ability to weather future economic shocks, in part to underpin the credibility of the new body.
“Rather than just capitalising banks well, we need to overcapitalise them,” Knot said in an advance extract of an interview due to be published in German newspaper Sueddeutsche Zeitung on Thursday.
He said it was necessary to introduce a higher capital hurdle for banks, adding there could be no exception to that.
Knot also said he was satisfied with the effect of the ECB’s government bond-buying programme and added that the differences between countries’ risk premiums were fair.
“There is therefore no reason to intervene at the moment. There are still insolvency risks, but the danger of a collapse has been averted,” Knot said in the newspaper.
He said the ECB’s bond-buying programme would no longer be needed once countries were slashing their debt dynamically and their debt-to-GDP ratios were moving towards the 60 percent hurdle.
“That could take a decade,” Knot said.