Schäuble says treaty change needed to support EU banking rules EU bank resolution authority needs a ‘sold legal base’, says German finance minister.

Germany's finance minister has revived calls for European Union treaty change to solidify future banking union rules.

Wolfgang Schäuble, writing in today’s Financial Times, said that a fully fledged EU bank resolution authority needs “a solid legal base”.

He said that limited treaty change would also create “a better separation” between the European Central Bank’s new role as banking supervisor and its traditional monetary policy activities.

The EU agreed to set up a banking supervisor earlier this year. EU member states and MEPs are currently wrestling with the first phase of EU-wide bank recovery and resolution rules. More radical proposals, including the creation of an EU-wide bank resolution mechanism, are expected to be put forward by the European Commission before the summer.

Germany has been broadly supportive of the banking union plans but has warned from the beginning of negotiations last year against rushing them, and has consistently said that they should be accompanied by treaty change.

In today’s article, Schäuble says that Germany will approach the Commission’s bank resolution proposals “with an open mind”.

But he adds: “While today’s EU treaties provide adequate foundation for the new supervisor and for a single resolution mechanism, they do not suffice to anchor beyond doubt a new and strong central resolution authority.”

In recent weeks the Commission has indicated that it can introduce a resolution mechanism without treaty change.

The Commission and some member states are eager to push ahead with the plan without legal changes because they know how lengthy and politically charged the process of treaty revision can be.

Schäuble said: “Amending the treaties takes time. Luckily, the alternative is not between a legally shaky resolution authority now and the postponement of repair work on the banks.”

“A banking union of sorts can thus be had without revising the treaties,” he said. “This would be a timber-framed, not a steel-framed, banking union. But it would serve its purpose and buy time for the creation of a legal base for our long-term goal.”