December 13, 2012
We’ve already assessed the impact of the new single supervisor with regards to the UK and the EBA, here and here, but there is also the obvious question of how the ECB will fare as the single supervisor.
- A non-euro country can reject a decision which has been altered by the ECB GC, however, it then runs the risk of being kicked out of the banking union.
- When exactly can the ECB take over supervision from national regulators? This seems to be mostly the ECB’s own decision, however, the instances are very loosely defined and the relationship between the ECB and the national supervisors remains fairly vague. Expect turf battles.
- What does the €30bn asset threshold apply to – i.e. does it include off balance sheet items – and who determines this?
- The regulation goes to great lengths to ensure that there is a clear flow of all “relevant” information between national supervisors and the ECB. However it is not clear who decides which information is “relevant”, meaning that the “principal-agent” problem still holds. In other words, the national supervisors are likely to have superior information about the banks still under their direct supervision and may have interests which run counter to the ECB.
- As we have noted previously, this puts a huge number of tasks under the ECB’s purview – there is yet to be a clear declaration of the democratic oversight of tasks (such as supervision) which should be held to account. There is also the practical question of how it will manage these tasks in terms of staffing, offices and funding.