LONDON Oct 30 Britain would turn to the
European Union's top court if plans for a euro zone banking
union harm the country's financial sector or the wider single
market, a UK government minister said on Tuesday.
EU leaders meet in December to formally vote on making the
European Central Bank supervisor for the euro zone's 6,000 banks
Unanimity among all 27 EU member countries is needed and
intense behind-the-scenes talks continue, in particular over the
rights of the 10 countries outside the euro zone.
The "outs" like Britain - the largest financial centre in
Europe - worry the single currency countries will have an
inbuilt majority to push through banking rules to their liking
that all EU states would have to apply.
"We should be vigorous in making use of the European Court
of Justice to defend the positions that we have," Britain's
financial services minister Greg Clark told a House of Lords
committee looking at the banking union plans.
Britain has already gone to the ECJ to challenge an ECB
policy requiring clearing houses that handle large amounts of
euro-denominated securities should be based in the euro area.
The Bank of England becomes Britain's top banking watchdog
from April and Britain wants it to be on an equal footing with
"We would have some concerns if the ECB were to acquire
greater powers than our own regulator has," Clark said.
But some lawmakers were sceptical, saying that as "Britain
may not be flavour of the month in Brussels" it may be
impossible to get watertight safeguards.
Clark said Britain's national interests were not being
threatened and it had allies with the same concerns.
Nikhil Rathi, a treasury official advising Clark, said there
was an understanding in the European Union that there was "some
way to go to make sure non-participants' interests are properly
taken into account".
The European Commission ultimately has the power to adopt
binding rules on banks and Rathi said the EU executive might be
the best way to ensure common rules are approved if regulators
Clark urged the lawmakers to avoid assuming Britain was
always on the back foot and could not take a leading and
assertive role in financial services.
The banking union would not be done and dusted in December
but would be a dynamic project as some "out" countries joined,
altering how it worked.
"This is going to require week-by-week, month-by-month
engagement," Clark said.