Bank of Estonia Calls for Common Oversight of EU Banks
SEB bank in downtown Tallinn is a Swedish subsidiary.
( Photo: Postimees/Scanpix )
In light of draft legislation at the European level, the Bank of Estonia has come out in support of implementing common oversight for all banks in the European Union.
A bill proposed today by the European Commission would create a single oversight mechanism for Eurozone banks, reported Postimees. The bill, supported by the Bank of Estonia and the Estonian Banking Association, would put the European Central Bank in charge of licensing credit institutions, and supervising capital and liquidity requirements.
The Bank of Estonia, however, does not believe the proposed measure goes far enough and should be expanded to include non-Eurozone banks in the EU.
Estonia is exceptional in the EU in that its banking sector is run entirely by foreign banks, primarily Swedish and Danish parent companies. Neither of those countries is a Eurozone member.
"It is important for us that the streamlining of regulations is not implemented only in the euro area, but in the whole of Europe,” said Madis Müller, deputy governor of the Bank of Estonia.
"There are currently common capital requirements and other requirements, but we should go further. The issue is sanctions for banks that do not fulfill these requirements. A big part of the practical issues are regulated differently in different member states,” said Müller.
Opponents to the idea, such as Sweden, have said that it is unthinkable to give the ECB control over banks that do not have a say in the Eurozone.