Great Britain is seeking ways in which can limit the power of the European Central Bank as the EU pushes ahead with its attempts at closer Eurozone economic integration.
The European Commission’s recently proposed plans to make the ECB responsible for supervising lenders as a step towards banking union has encountered opposition from the British who believe that such a plan would see non-Euro nations being continuously outvoted over aspects of rule making and region wide financial decisions.
“The concern is that the Bank of England can find itself outvoted by the ECB on aspects of rule making,” said one official. Britain will not join the banking union. The Bank of England will become the UK regulator next year. They are worried that the euro area will be able to push through a whole lot of decisions of its own volition. They are looking for something with checks and balances.”
The amount the ECB and the EU as a whole wields has caused many in Britain to be disgruntled at what they perceive as a loss of powers and sovereignty to an unelected body that they have no control over. Calls for a referendum on the UK’s continuing membership in the EU have grown increasingly louder over the past few months. The British opposition to more banking integration has already caused relations between the two powers to sour and strain an already tumultuous relationship.
British Chancellor George Osborne is growing increasingly concerned that the ECB will use its authority to impose EU-wide regulations that would favour nations using the Euro as their currency, putting London’s position as a leading financial centre at risk.
An official in the British government said; “It seems unlikely that the ECB would ride roughshod over the wishes of the Bank of England, but that is what the British Treasury is worried about, they want safeguards to make sure that doesn’t happen.
We’ve consistently said that the euro area, like any single currency, needs closer economic and fiscal integration to secure its future. More integrated supervision of euro area banks is a part of that.”
We’ve also been clear that any measures must be compatible with the single market, and uphold a level playing field for all EU member states.”
EU leaders are set to meet in Brussels on Thursday and Friday this week where the subject of a closer banking union will be discussed. All members of the European Union have to agree to the banking union before it can go ahead. If it is accepted then the European stability mechanism will be able to be put into force.
Such a move is sure to boost the Euro but will no doubt have a negative impact on the Pound. If the summit ends in a stalemate then both currencies will suffer as the markets are certain to see such as an outcome as a failure and look to the safe haven currencies of the US Dollar and Japanese Yen.
There are sure to be tough negotiations from both sides and it will be interesting to see if either party will compromise for the greater good of resolving the Eurozone debt crisis.
As of 12:05am
The Pound to Euro exchange rate is currently trading at 1.2385
The Pound to US Dollar exchange rate is currently trading at 1.6060
The Pound to Australian Dollar exchange rate is currently trading at 1.5686
The Euro to US Dollar exchange rate is currently trading at 1.2968
The Euro to Pound exchange rate is currently trading at 0.8074
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