Europe's financial services chief called on Friday for "credible" banking controls to be imposed from Brussels, warning a resistant industry it was unacceptable for taxpayers to pick up the tab for their errors.
"If we get to the point, which we're not at yet, where we build a truly efficient and credible system of supervision, surveillance and prevention of future crises, I will take that into account when it comes to calibrating banking regulatory measures," France's Michel Barnier told reporters.
The European commissioner for the internal market and financial services was speaking on the sidelines of informal talks among European Union finance ministers in Madrid.
"There will be banking regulation, there will be capital requirements," he said. "The only question is: where do we draw the line?"
In drawing lessons from the financial crisis of 2008-2009 that led to the world's deepest recession since World War II, the EU is working on a system of private sector financial supervision covering banks, insurers and markets that is aimed at delivering early warning signs of future problems.
In the governmental sphere, Brussels is also pushing for national budgets to be subjected to peer review so as to avoid similar systemic threats to interdependent economies.
Disputes between the European parliament, which wants tougher controls, and member states, led by Britain which wants the lightest of regulatory hands placed on easily Europe's biggest finance industry, have made it difficult to agree on the final shape of the supervisory architecture.
"We need a deal quickly," Barnier warned if anything stronger than "artificial" controls are to be put in place.
"I hear ministers and bankers telling me: go easy, if you ask for capital requirements that are too great, we won't have any money left with which to finance the economy.
"I remind them of the costs of the crisis," Barnier underlined, saying it was "unacceptable for taxpayers, because we hadn't drawn up new mechanisms, to be forced to pay for the mistakes and over-the-top actions of certain actors within the financial system."
Barnier said he was in Madrid to "measure the degree of ambition" of various ministers to core elements including national insurance funds paid into by financial institutions that could be used for future bailouts.
Copyright 2010 AFP Global Edition
