Germany and France publicly clashed on Tuesday over plans to put the European Central Bank in charge of supervising banks, deepening a dispute over the scope of the ECB’s powers that threatens to undermine one of Europe’s boldest reforms.
With time running out to meet a pledge to complete the legal framework for an EU-wide banking union by the end of the year, Germany’s Finance Minister Wolfgang Schaeuble told a meeting of EU finance ministers he said could not support a plan that would give the ECB the final say on supervision.
France’s Pierre Moscovici protested against any watering down of a plan central to Europe’s response to a five-year banking crisis that promises to unify the way it deals with problem banks and end a previously haphazard approach.
“The right of the last decision cannot be left to the ECB Governing Council,” Schaeuble told a meeting of finance ministers in Brussels in comments broadcast to reporters, adding that there could be no deal unless national supervisors had responsibility for most banks.
“A Chinese wall between banking supervision and monetary policy is an absolute necessity,” he said, also voicing skepticism that an independent central bank such as the ECB should even take on the tasks of supervision.
Moscovici countered that EU leaders who had given finance ministers responsibility for drawing up a supervisory framework had always placed the ECB at the center of their vision.
“We have no mandate for a dual system of supervision which would call into question the existence of a single system for some banks,” Moscovici told the meeting.
The depth of divisions between France and Germany, the two biggest economies at the heart of euro zone integration, pointed to the difficulty of reaching an agreement on Tuesday.