ECB Constancio: See Need To Revise EU Failed Banks Plan
BRUSSELS (MNI) - Aspects of the current EU plans for a legal framework to wind down failing banks could not be applied in the euro area, ECB Vice President Vitor Constancio warned EU finance ministers on Tuesday.
A provision in the legislative proposal now being discussed by EU governments that would allow national bank resolution funds to borrow from central banks "could not be applied" in the euro area because "we could not fund such funds," Constancio said.
"We also think in more general terms that it goes against the spirit of the treaty, with respect to the independence of central banks from the financing tasks of the government," he said.
The ECB Vice President also said that he believed there needed to be "financial backstops at the national level in place in order to avoid any doubts by the citizens on the capacity of deposit guarantee schemes to fulfill their commitments."
Italy's Prime Minister and Finance Minister, Mario Monti, welcomed the proposal but said it was "not ambitious enough to address the current causes of instability" and urged governments to consider a common deposit guarantee scheme and resolution fund to underpin a future banking union as advocated by EU leaders at their summit last month.
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