New European bank rules should come sooner, says ECB

November 05, 2013 | 09:07

(0) user say

Europe-wide rules for winding up failed banks should be in place by 2015, not 2018 as planned so as to give investors clarity, a top European Central Bank official said on Monday.

The European Central Bank (ECB) headquarters in Frankfurt am Main. (AFP/Daniel Roland)

BERLIN: Europe-wide rules for winding up failed banks should be in place by 2015, not 2018 as planned so as to give investors clarity, a top European Central Bank official said Monday.

"I think it would be wise for the rules to come into effect on January 1, 2015," ECB executive board member Joerg Asmussen told a conference in Berlin.

Waiting until 2018 would generate "too much uncertainty," he said.

European member states are currently trying to hammer out the rules for a new banking union in order to avoid a repeat of the bloc's banking crisis that pushed countries such as Ireland and Greece to painful bailouts.

The new regime not only includes a single supervisory authority, which will be housed within the ECB, but also a resolution mechanism for winding up failed banks.

But while the framework for the former has been agreed, there are still differing views on the latter.

All EU member states, and not just eurozone members, must agree on the so-called "bail-in" rules with the EU Commission and the EU parliament by the end of the year.

A bail-in is when a bank's shareholders and creditors are first in line to help rescue a bank before turning to the taxpayer.

A Commission official suggested that Brussels suggested a longer wait to give more time to adapt to the new regime.

"But what happens in 2016 and 2017 if a bank folds. That's not clear," Asmussen said.

AFP

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional