Mario Draghi Is Serious About a European Banking Union
Mario Draghi, the head of the European Central Bank, expressed his support for a central banking union for the eurozone while on a trip to Berlin, Bloomberg reports.
At a meeting between top financial officials held last week in Lithuania, many European Union executives argued for the formation of the first step toward a potential banking union for the eurozone. The measure would create a single supervisory mechanism that would have oversight responsibilities and capabilities for all of the major banks in the region. Proponents claim that it would be an effective way to ensure that banks do not take on bad debts, thereby limiting the need for bailouts as well as bringing national government and banks closer to privately held enterprises.
Critics of the plan, who include German Finance Minister Wolfgang Schaeuble and Swedish and Finnish representatives, question the efficacy of the European Central Bank to fulfill its supervisory role. They instead argue for banks to be overseen on a country-by-country basis, with a central oversight authority in existence only to provide second opinions or to resolve disputes. Critics also have brought into light that there is a possible conflict of interest between a central authority that provides loans and other banking services as well as oversees different banking operations.