BIS backs pan-European banking system
24 June 2012
, by Greg Robb - Washington (MarketWatch)http://www.marketwatch.com/story/bis-backs-pan-european-banking-system-2012-06-24The Bank for International Settlements, a global forum for central banks, on Sunday backed moves to create a pan-European banking system
The BIS said the creation of one regulator, one supervisor and one deposit-insurer would help ease the European debt crisis.
“The conclusion is hard to escape that a pan-European financial market and a pan-European central bank require a pan-European banking system.
Banks in Europe must become European banks,” the BIS, a global forum for central banks, said in its annual report published Sunday.
“If adopted, these measures will break the adverse feedback between the banks and the sovereign and other destructive links that are making the crisis so severe,” the report concluded.
There are concerns that fiscal authorities in countries like Spain can no longer support their banks or their economies.
In its review of the global economy, the BIS complained that central banks ”are being cornered” into prolonging monetary stimulus because governments are dragging their feet and delaying adjustments.
The BIS expressed some discomfort that rates are staying so low for so long.
“With nominal interest rates staying as low as they can go and central bank balance sheets continuing to expand, risks are surely building up,” the report concluded.
Proposals to centralize Europe’s banking system are already on the agenda of the upcoming European Union summit on June 28-29.
Hope that the EU summit would set out a new path for Greece was dimmed after a government spokesman announced Sunday that Greece’s new prime minister, Antonis Samaras, and his finance minister, Vassilis Rapanos, will miss the meeting because of illness.
The “troika” that oversees Greece’s bailout plan has postponed its plans to visit Athens on Monday.
The troika consists of the European Commission, European Central Bank and International Monetary Fund.