FRANKFURT, Germany (AP) — A top European Central Bank official says the European Union should move ahead quickly with a new banking supervisor to deal with its shaky financial system.
Benoit Coeure, who sits on the bank's six-member executive board, said in a speech Monday that adopting a new watchdog role for the ECB is "the most urgent component" of bringing bank supervision and bailouts under the control of the EU. Coeure added that it needed to be in place "as early as possible in 2013."
EU officials have proposed a Jan. 1 phase-in for the ECB to start supervising banks in the most troubled countries, with all 6,000 banks being supervised by the start of 2014.
But German officials say it can't be done that quickly and momentum has slowed on the project.
The idea of a single supervisor and bailout fund, dubbed "banking union," is a key part of eurozone officials' efforts to contain their three-year-old crisis over too much government debt.
Troubled banks are a key part of the region's problems, because they can quickly ruin government finances through heavy costs for bailouts. National supervisors have also been protective of domestic financial institutions and slow to force insolvent banks to restructure.
Ireland and Spain, for instance, had relatively low levels of debt before the crisis, but were then hit by expenses for rescuing banks that had made lots of bad real estate loans.
Coeure says that three elements were needed: the single supervisor, plus a bailout fund and EU-wide deposit insurance to protect people's savings if a bank goes under. Germany also opposes the deposit insurance pillar, apparently fearing its domestic banks will pay for problems elsewhere.