WIREDGOV

A new inquiry into reform of the EU banking sector was announced yesterday by the House of Lords EU Sub Committee responsible for looking into economic and financial affairs.

The Committee will look at the sector in the context of the fast moving agenda of reforms at an EU level. This will include assessing proposals for an EU Directive on bank recovery and resolution, looking into the European Council’s vision for an “Economic and Monetary Union” as set out by President Van Rompuy, and investigating the intention of euro area leaders to create a single banking supervisory mechanism.

While the Prime Minister has made clear that the UK will not take part in fundamental elements of a banking union, the implications of these developments for the UK’s financial sector will be wide reaching, and the Committee want to assess what impact these reforms would have on the UK. The inquiry will take further proposals for reform into account as they emerge and take shape in the coming weeks and months.

The Committee's call for evidence, published yesterday, asks specifically:

• What has the euro area crisis revealed about the weaknesses of the EU banking sector?
• What are the key elements of an effective banking union?
• What needs to be included in proposals for a single European banking supervisory framework?
• What powers and responsibilities is it appropriate for the European Central Bank to possess in relation to supervision and regulation of euro area banks?
• How should the UK be responding to European proposals in this area?
• Is it realistic of the Government to say that the UK’s non-participation in a banking union need not damage London’s position as the leading financial centre in Europe?