LONDON (Reuters) - The European Central Bank should have the authority to regulate all 6,000 banks in the euro zone, European Central Bank Vice-President Vitor Constancio said on Monday.
While the central bank would only deal with the large international institutions directly and guide national regulators on smaller banks, the ECB should nevertheless have the authority to regulate smaller ones as well, Constancio told a committee of Britain's upper house in parliament on Monday.
"From the start we have been in favor that from a legal point of view the ECB would be given legal authority over all the banks," he said.
Germany wants to maintain the oversight over its cooperative and savings banks, saying the ECB should focus on the big players.
European Union leaders have agreed to allow the European Central Bank to supervise banks from next year, but questions remain about how the process will work, which lenders will be involved and whether those in trouble can be helped.
Constancio said he welcomed the agreement, though he said it meant that banks could not be directly recapitalized with European funds before 2014.
Reporting by Sven Egenter and Huw Jones