FRANKFURT (MNI) – A pan-European deposit guarantee scheme could
initially be supported by an European Central Bank credit line, the
International Monetary Fund said Wednesday.
In its euro area staff report, the IMF called for the
implementation of a full-fledged banking union, including a pan-European
deposit guarantee scheme and a pan-European bank resolution mechanism.
A deposit guarantee scheme should eventually “be funded by a levy
on the industry; but to be effective, it would need ready recourse to
additional funding in times of stress, from a common pool of
government-provided resources or – for the euro area – an ECB credit
line,” the report said.
Looking at the joint supervisory framework, the IMF said it would
be most effective “if it encompassed the entire banking system, but
could at first focus on cross-border banks and large systemically
important financial institutions in the euro area.”
The fund said that the ECB “could play the role of common
supervisor.” To further strengthen its financial markets role, the ECB
could also be given explicit responsibility for financial stability and
full lender-of-last-resort functions, the fund said.
Officials on the European Commission and some national banking
authorities have doubts about the wisdom of pooling such powers at the
central bank. Even some ECB policy-makers fear that taking on
supervisory powers could jeopardize the central bank’s independence and
interfere with its price stability mandate.
— Frankfurt bureau: +49 69 720 142, email: jtreeck@marketnews.com —
[TOPICS: M$$EC$,M$X$$$,MT$$$$,M$$CR$]
