V. Vasiliauskas: what the European financial sector lacks to heal its own wounds
A properly installed European banking union elements — independent supervision, efficient bank restructuring and a reliable deposit guarantee scheme — would ensure that the European financial sector will be able to heal its own wounds. These were the words of Vitas Vasiliauskas, Chairman of the Board of the Bank of Lithuania, at the Interparliamentary Conference on Economic and Financial Governance of the European Union.
“The Council of the European Union this week approved legislation regulating the single supervisory mechanism, and reliable implementation of this mechanism will be a major challenge for both the European Central Bank and national supervisory institutions,” said V. Vasiliauskas.
The European Central Bank in November 2014 will be completely responsible for the new European supervisory system and direct supervision of 130 of the largest European banks.
According to V. Vasiliauskas, in aiming for a well-functioning single market, an integrated financial regulation, supervision and risk control system is necessary, which could ensure the most effective crisis management in case problems arise.
An especially important initiative is that failing financial institutions would be assisted first of all by using the money of the holders and creditors, not tax-payers. Therefore, the single supervisory mechanism should add to the Directive on Bank Recovery and Resolution, while the creation of a banking union would complete Europe’s deposit guarantee scheme.
Speech by Vitas Vasiliauskas, Chairman of the Board of the BoL, at the Interparliamentary Conference on Economic and Financial Governance of the European Union Session III: “Banking Union and Financial Integration in the European Union”