Sylvester Eijffinger, Rob Nijskens, Friday, November 23, 2012

The Eurozone is moving towards a banking union with the ECB at its centre. This column argues that there are problems with the European Commission’s proposal. The ECB can never supervise all 6000 banks in the Eurozone, supervision should be separated from monetary policy to avoid conflicts of interest, and joint deposit insurance and resolution funds must be created. Furthermore, the ECB should exert constructive ambiguity in its supervision.