Leaders of European Union countries will review a plan to broaden supervisory duties for the European Central Bank (ECB) to countries outside the joint currency of the euro, as complaints from non-euro countries about possible disadvantages to them are addressed.
Reuters reported Wednesday that after leaders agreed last week to implement a new supervision system for the ECB, the 10 EU countries that do not use the euro protested that the new system could put them at a disadvantage. So leaders are at work on a means to accommodate such countries as Sweden and Denmark should they want to join.
On Tuesday a draft document was circulated among EU officials that provided a means of overcoming the non-euro countries’ objections via the establishment of an internal supervisory board at the ECB. The board would be involved in lender supervision and would also provide non-eurozone members a vote in the proceedings.
One EU official was quoted saying, “This helps square the circle for non-euro countries. It is an effort to find equal treatment.”
The draft provides for the final say on any action by the supervisory board to be retained by the ECB, although it must provide reasons if it chooses to decline the board’s decision. A second official said in the report, “The ECB will take all the key decisions.
While such authority could prove troubling to a non-eurozone country like Hungary, for instance, because the Hungarian government would want equal representation should it opt into the new supervisory system, such representation presents a legal challenge because the ECB is only obliged to the authority of the 17 countries within the currency bloc.
The document does, however, segregate the powers of the ECB from those of agencies from each individual country as a concession to those who fear that the central bank’s authority will be too far-reaching. The document’s language provides for national supervisors to “carry out regular operational tasks” in monitoring banks, while the ECB will be concerned with bailed-out banks and systemic banks. The ECB would still retain the ultimate authority.