Highest German court rules EU banking supervision legal

Source: Xinhua| 2019-07-30 23:19:26|Editor: yan
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BERLIN, July 30 (Xinhua) -- The framework for the European Banking Union (EBU) did not exceed the competences of the European Union "if interpreted strictly," the German Federal Constitutional Court ruled on Tuesday.

The EU had not exceeded the "competences conferred on it by the Treaties when adopting the legislative framework regarding the European Banking Union," the German Federal Constitutional Court ruled.

"The regulations on the European Banking Union largely exhaust the given legal framework, but do not exceed it in a form relevant from the point of view of the Basic Law," said court president Andreas Vosskuhle.

The judges in Karlsruhe rejected two constitutional complaints against the European Banking Union, which were directed at its two pillars, banking supervision and a settlement mechanism.

According to the European Commission, the ECB supervisors could examine the business operations of major European banks and ensure they were complying with EU banking rules.

The ECB supervisors were also authorized to manage bank resolution if major European banks failed, the European Commission noted.

Following the German Federal Constitutional Court ruling on Tuesday, the response among German financial institutions and politicians was positive.

"We take a positive view of the fact that European progress in the form of uniform banking supervision in Germany has been secured by constitutional law," Joachim Wuermeling, board member at the German central bank told the newspaper Handelsblatt.

Marcel Fratzscher, President of the German Institute for Economic Research (DIW Berlin), also welcomed the ruling as "a wise decision".

"The financial and sovereign debt crisis has shown that, in times of globalization, banking supervision must also be organized across borders," said Markus Ferber, coordinator of the conservative EPP group in the Economic and Monetary Affairs Committee of the European Parliament.

Fabio De Masi, deputy chairman of the left-wing parliamentary group in the German Bundestag agreed that "European banking supervision makes sense".

Since 2014, the EU's largest banks and banking groups have been supervised by the European Central Bank (ECB) in Frankfurt to protect against new financial crises, according to the German Financial Supervisory Authority (BaFin).

Around 120 institutions were subject to this supervision, of which 21 were in Germany and included Deutsche Bank, Commerzbank and Bayerische Landesbank, BaFin noted.

BaFin and the Bundesbank, the country's central bank, continued to be responsible for the approximately 1,600 other German institutions.