European banking integration

Chris Burford cburford at gn.apc.org
Mon Sep 14 11:20:44 PDT 1998


Not dramatic but probably important.

Last week ended with the European Central Bank allowing four countries outside the Euro, one of them Britain, to participate in an important subcommittee, coordinating banking supervision and ensuring financial stability.

The other countries are Greece, Denmark and Sweden, but clearly the significance is in including London as Europe's largest financial centre.

This decision has no doubt been sharpened by anxieties about instability in Asia and Russia, but it also reflects a developing sophistication in managing economies around the Euro Zone.

While the ECB has only the Euro 11 on its Governing Council, its General Council includes all 15. And a decision in July had already opened up coordination of a payments system between central and commercial banks to institutions of the outer 4.

The UK will be represented on the new committee by the Bank of England and the important new Financial Services Authority set up by Gordon Brown.

Since national authorities will remain in charge of banking and financial supervision under Europe's new monetary regime, according to the FT of Thursday "The banking supervisory committee could become a key body for coordinating policy across national boundaries."

It sounds as if it could become the most significant policy shaper in the Euro Zone and its peripheries.

Capitalism tends to monopoly, and these new institutions are about the regulation of monopoly tendencies in a rational way.

Rational, of course, for whom?

Chris Burford

London.



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