‘The EU debt crisis is still the most acute threat to our collective financial stability. The crisis reflects that the interdependence between banks and national governments is intensifying. The problems experienced by banks are causing governments to get into difficulties and vice versa. These problems are too complex, often cross-border in nature and financially so far-reaching that national governments can no longer deal with them. An effective European banking union can offer a way of breaking through this negative spiral.’
Is EU supervision enough or is more needed?
‘We’re positive about the idea of EU supervision, since we believe it will enable the problems experience by banks at European level to be more vigorously tackled. But the introduction of EU supervision alone isn’t of course enough. A lot more has to happen. DNB would like to see a number of measures put in place simultaneously: supervision of banks in the eurozone by the European Central Bank, a new EU resolution authority to recapitalise or liquidate institutions in difficulty, and a European deposit guarantee fund.'
Will the EU supervisory authority soon only be monitoring the ‘heavyweights’ while leaving central banks such as DNB to deal with the smaller fry?
‘It’s often thought that EU supervision is only interested in the ‘VIPs’ of the banking world, the so-called European ‘systematically important banks’. Obviously that’s true, since if one of these big players gets into trouble the impact will be considerable. But that of course isn’t all that’s required. On the contrary; we feel that the EU supervisor should also look at the banks that pose the greatest risk. And these are not by definition the big institutions. You only have to look at the problems affecting the savings banks in Spain to see that’s true.’
When can we expect EU supervision to start?
‘That hasn’t been formally decided yet, although it looks likely that it will be some time in 2013. The practical development of the supervisory mandate will be gradually extended in phases throughout 2013 and 2014. Little by little, a growing number of decisions and tasks will be transferred from national authorities to the EU regulator and DNB will effectively become a subsidiary office of the ECB.’