Tuesday, June 12, 2012
Debt crisis: Bundesbank scuppers all talk of EU banking union
June 12, 2012
Andreas Dombret, a key board member of the Bundesbank, said the grand plan by Brussels is premature and unworkable as constructed.
"It has to follow a deeper fiscal union as it would imply significantly increased risk sharing amongst countries," he told a Bank of America conference in London.
Mr Dombret said a pan-EMU deposit-guarantee scheme and a debt resolution fund would require "a genuine, democratically legitimated fiscal union" and a new treaty.
"A banking union is a sensible way forward as long as liability and control are aligned. What I mean is you don't give somebody your credit card if you don't know what he or she is going to do with it," he later told ITN.
The Bundesbank's vice-president Sabine Lautenschlaeger hammered home the point in what is a clearly co-ordinated push to check the plan. "The result would be a pooling of the governments' liabilities through the back door," she said.