Austria's Fekter backs Schaeuble on banking union
VIENNA, Sept 17
VIENNA, Sept 17 (Reuters) - Germany's approach towards completing a euro zone banking union won the backing of Austrian Finance Minister Maria Fekter on Tuesday, when she said she would like to change EU law eventually.
Berlin has insisted the 28-nation bloc needs to amend its treaty if it is to move the power to unwind or fix struggling banks from a national to a European level.
But EU officials said at the weekend that Germany was working on a plan that would move things forward without changing existing EU law, potentially removing a major hurdle to finish the ambitious project.
German Finance Minister Wolfgang Schaeuble has sought a two-step approach to the "Single Resolution Mechanism". The first would coordinate action among national resolution agencies and funds but without a pan-European agency. The second would require Treaty change to set up such an agency, he has said.
"I am very close to Wolfgang Schaeuble and the German position that we have to try to have an agency that is anchored in the treaties so that we don't get into an Inquisition mode," Fekter told a financial conference.
There also needs to be clarity on separating the European Central Bank's monetary and bank supervisory roles, she added.
"The only thing to lead us out of this dilemma is clear official regulation with a treaty change. (That is) not possible at the moment, so that is why we are using this temporary construction or else we would lose too much time."
She also opposed the idea of shovelling ailing banks' debts into a single resolution mechanism, saying this would promote "moral hazard", or encouraging reckless action by banks knowing that they will get bailed out.
She reiterated her opposition to a common deposit insurance system, saying it was enough for her to worry about ensuring deposits in Austrian banks.
Thomas Wieser, a senior euro zone official who coordinates policymaking from Brussels, told the conference it was important to bring national law into line with the supernational agencies being set up in Europe.
"Wherever in the past two, three, four years we have taken deeper integration steps toward European integration we saw we are bumping up against the limits of what the constitutions, the treaty allow," he said.
"Further integration steps after those that are now being negotiated can be adopted only with greater or lesser treaty changes."
ECB policymaker Ewald Nowotny also stressed the need for political and economic integration to go hand in hand.
"I cannot see banking union completely independently from the readiness to go into the next political areas. In other words, if you are not ready to go into these areas then it would be dangerous to take the second step before the first," he said. (Reporting by Michael Shields; editing by Ron Askew)