Finance ministers from the 27 European Union states on Thursday finalized an agreement, giving the European Central Bank more powers to oversee the functioning of banks in the crisis-hit region. The decision came ahead of the two-day EU summit in Brussels starting today.
The ministers plan to make the supervisory system fully operational by March 2014 or 12 months after the entry into force of the legislation, whichever is later, according to statement issued after the meeting.
The Single Supervisory Mechanism (SSM) will be composed of the ECB and national competent authorities. As the chief watchdog, the ECB will be responsible for the overall functioning of the SSM and will have direct oversight of Eurozone banks, but "in a differentiated way and in close cooperation with national supervisory authorities," the ministers said in the statement.
Non-eurozone countries participating in the SSM would have full and equal voting rights on the supervisory board, while national supervisors would remain in charge of tasks not conferred on the ECB.
The proposals also call for changes to the European Banking Authority regulation, in particular as regards voting modalities, to ensure equitable and effective decision-making within the single market.
"The amendments would ensure that the countries participating in the SSM would not unduly dominate the EBA's board of supervisors," the statement read.
The EU presidency will be negotiating the deal with the European Parliament, with the aim of adopting the legislation before the end of the year.
The ministers said the new system is designed to ensure clear separation between the ECB's monetary and supervisory tasks to eliminate potential conflicts of interest. To this end, a supervisory board responsible for the preparation of supervisory tasks would be set up within the ECB.
Later today, the finance ministers' gathering in Brussels is expected to endorse EUR 34.4 billion loan disbursement to Greece, following successful completion of its debt buyback program on Wednesday.
Yesterday, Greece's debt management agency said the government had bought back EUR 31.9 billion of bonds at 33.8 percent of their face value.
by RTT Staff Writer
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