The European Commission's proposal consists of an EU Council regulation giving the Frankfurt-based European Central Bank (ECB) unprecedented new powers, which will require unanimous agreement of all EU member states.
A second proposal for a regulation to modify the role of the London-based European Banking Authority (EBA) will be subject to co-decision procedure, requiring the European Parliament's consent.
Issues could be conflated and delayed
A key aim is to implement the new supervisory machinery as soon as possible, since the drafts suggest that the ECB could start in its new role at the beginning of next year.
EU diplomats speaking on condition of anonymity yesterday said that the two papers could become conflated, however, making the EBA regulation the focus of attempts to hold up the legislation in Parliament.
“At the same time, this autumn, the multi-annual financial framework will be in the negotiation mix, and this could also become a part of a tangled web of negotiation,” one European diplomat told EurActiv, referring to the 2014-2020 EU budget.
The 10 non-eurozone member states met together on 10 September at Hungary’s invitation. EurActiv understands that the group has met on a regular basis and in different configurations since May, to discuss a range of portfolios where their interests are at stake.
The group is far from unilateral however, differing both in their aims with regard to banking union, and their strategic approach to the negotiations.
Central European countries - including Poland, the Czech Republic and Hungary - committed to eventually join the single currency when they became EU members in 2004. But they vary in the their attitudes to the obligation.
Whilst Poland and Hungary broadly accept their obligation to eventually join the euro zone, the Czech Republic believes that the changed landscape in the eurozone might nullify its pledge to join.
These states share the objective of protecting their banking industries from any knock-on effects that arise from a large – and well-guaranteed – banking sector on its doorstep, hosting many parent banks with branches and investments held in their territories.
EBA-ECB relationship crucial to discussions
They also want to ensure that if they join the supervisory mechanism before adopting the euro, any requirements to comply with rules are balanced with rights to see the new super-regulator’s proposals, and voice opinions on these.
Countries with euro opt-out clauses, including Britain – where regulation over the huge banking sector is at stake – and Denmark, want to retain the power of their own regulators in the face of the ECB, since neither wants to join the new scheme.
Both countries are looking to ensure that the London-based EBA keeps a balance of power next to the ECB, and are unhappy with the current drafting of voting rules applying to disputes between the two bodies.