Wall Street Journal
October 16, 2012
Covering the euro-zone crisis is often surreal. But seldom as much as when you hear a senior official liken banking supervision to love. But let’s take things from the start.
Much of the debate behind closed doors in Brussels and Frankfurt these days is about the single banking supervisor — an agency of/under the European Central Bank that will police the currency bloc’s banks. The details of this first step towards a banking union are being negotiated right now, but one thing that makes it interesting is that its creation and effective operation is a prerequisite for the euro-zone bailout fund to rescue banks directly.
The key word here is “effective.” It’s not enough for this new institution to be designed, legislated, set up. It needs, euro-zone leaders agreed back in June, to be effective. That’s so the bailout fund–the European Stability Mechanism–can trust that the banks it’s saving don’t blow up in its face or on its balance sheet.
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