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Rehn: Member states will retain power over banks

European Commission VP Olli Rehn has sought to allay fears that a proposed EU banking union would strip member states of the power to supervise their own lenders. Finland's PM has hailed the plan.

Olli Rehn
Rehn is Barroso's right-hand man. Image: Yle

Speaking to Yle on Wednesday, Economic Commissioner Rehn argued that centralisation of bank supervision is essential in order to fend off future banking crises. The Finn, who is second in command at the Commission, stressed that all bank monitoring would not be shifted away from individual countries.

“Banks operating in Finland are part of the eurozone’s common banking supervision system, where the European Central Bank has the overall authority and overall responsibility. But the daily oversight of banks will still be carried out by national banking supervisors,” Rehn said.

"Plenty of know-how"

Rehn denied claims that the ECB would take over supervision of all 6,000 banks within the eurozone.

”National banking authorities, who have plenty of experience and know-how, will continue to play a central role in day-to-day supervision,” he said.

Earlier on Wednesday, European Commission President Jose Manuel Barroso proposed a full-fledged EU banking and budget union.

PM: Some state officials "look the other way"

Prime Minister Jyrki Katainen and Finance Minister Jutta Urpilainen, meanwhile, said that it is important that any links between banks and state governments be cut.

The premier said that greater supervision would benefit Nordic banks.

He noted that "in some countries national supervisors sometimes look the other way" when it comes to banking problems.

Urpilainen, for her part, said the goal of increasing investors' responsibility for cleaning up banking crises is a good one.

 

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