Bank union: Does Common European Bank Supervision Constitute a New Bank Bail-out Instrument?

In the debate over the future of the Eurozone there is also discussion of the concept of a banking union. According to Hans-Peter Burghof, University of Hohenheim, the danger of a European banking union under the present conditions lies in the fact that the assets held by certain countries in the currency union may be transferred to the domain of other countries without effective controls. In the opinion of Bernhard Speyer, Deutsche Bank Research, neither the internal financial market nor the stability of the currency union can be saved without a banking union. Moreover, basic preliminary work and a change to the treaty are required to achieve any such union. A banking union is neither a replacement for steps towards integration in other areas, nor is it suitable as a quick-fix solution to the acute problems suffered by the banking systems of individual countries. For Michael Kemmer, Bundesverband deutscher Banken, an association representing private banks established in Germany, the fundamental issue is ensuring that steps along the path towards a banking union are taken in the right order. Whoever demands European deposit protection and a European resolution and restructuring fund as a first step is, in reality, demanding a communitisation of risk, and will start to stumble earlier rather than later. Jörg Rocholl, European School of Management and Technology, Berlin, currently sees the conditions for a banking union as heavily constrained. Germany should therefore reject any over-hasty introduction of a banking union. It would be impossible both economically and politically to prevent risks arising in countries without any regulating devices from being communitised at the expense of all countries. For Georg Fahrenschon, Deutscher Sparkassen- und Giroverband, common European deposit protection is nothing more than a form of large-scale redistribution at the expense of German savers, and does not constitute a response to the crisis in other parts of Europe. In the view of Jörg Asmussen, European Central Bank, the crisis has highlighted the importance of cross-border solutions to financial stability in a unified currency area. A financial market union therefore constitutes a major contribution to a stable economic and currency union. For Clemens Fuest, Oxford University, a banking union in the Eurozone can offer a long-term perspective, which is more credible than the idea of making a central fiscal union out of the Eurozone.