EBRD calls for expanding access to new eurozone banking union

EBRD statement:rnrnEBRD calls for expanding access to new eurozone banking unionrnrnPlans for the creation of a European banking union are an important step towards solving the current crisis in the eurozone but they need to be extended in order to embrace emerging Europe, the European Bank for Reconstruction and Development (EBRD) said in its latest annual economic report.rnrnThe EBRD’s Transition Report 2012, published today, said the latest EU proposals to unify bank supervision and to harmonise bank resolution mechanisms were “large steps in the right direction”.rnrnHowever, they remained incomplete by limiting full membership to eurozone members and by maintaining resolution authority at the national level.rnrnThis had raised concerns, particularly within emerging Europe, that banks headquartered outside the eurozone would be disadvantaged.rnrnThe EBRD’s report concluded that: “Non-eurozone countries should be allowed to opt into both the supervisory mechanism and the ESM (European Stability Mechanism)”.rnrnIt also proposed there is an extension of the banking union for European countries that either could not or did not want to become full members.rnrnThis could allow non-eurozone countries to benefit, for example, from conditional liquidity support from the European Central Bank.rnrnThe report also highlights concerns that the proposed eurozone-level supervisor might not pay enough attention to local problems, particularly in the smaller countries. To address these concerns, individual countries should be given sufficient voice in the governance of the single supervisory mechanism, according to the report.rnrnTo improve the cooperation between home- and host-country authorities of multinational banks in areas not covered by the single supervisor, such as the resolution of failing banks, the report proposes “cross-border stability groups” that would also include Ministries of Finance.rnrn