CNB notes banking supervision agreement

As the sole and consolidated financial market supervisory authority in the Czech Republic, the Czech National Bank has been very closely involved in the Czech authorities’ talks on the proposal for a single European banking supervisory authority and on other steps towards the creation of a banking union since the talks were opened at the start of September. CNB representatives have been actively negotiating on all proposals, participating in bilateral talks with EU Member States and European institutions, attending working group, committee and Council meetings, and helping to form opinion coalitions with other countries at all levels. Many of the proposals initiated and submitted by the Czech authorities in partnership with the CNB are reflected in the final wording.

In the final phase of the negotiations, the political representation of the Czech Republic did not fully incorporate the recommendations of the CNB into its position, and the CNB therefore decided not to take part in this final phase. The CNB respects that the power to decide on the position lies with the political representation, since it is the political representation which bears ultimate responsibility for the outcome of the negotiations.

“In the final phases of the negotiations, we at the CNB had a different view on the extent to which the proposed compromise sufficiently allays the concerns that we jointly identified at the outset together with the other Czech authorities and expressed publicly. In our opinion, the assurances given to the Czech Republic could be stronger. Nonetheless, we believe that the reported agreement is, thanks to the intense activity of the Czech authorities, a better outcome than what would have been produced by a passive, wait-and-see approach. We all worked hard to achieve it. Thanks to the joint efforts of the CNB, the Office of the Government and the Ministry of Finance, we were – at the end of September – one of the first countries to formulate a position document on the proposals submitted in late summer,” said CNB Governor Miroslav Singer.

The CNB points out that the European debate on the future banking union is far from over. Only the first stage has come to an end. The CNB will of course closely monitor and take an active part in the negotiations on subsequent key legislative steps concerning financial integration in the EU, be it the common rules for bank resolution and cost sharing or the issues of intragroup support and deposit insurance. The CNB remains critical of many of the proposals presented so far. The debate on the fundamental issue of settling the costs of problems in the financial sector and setting rules for resolving financial instability at national and European level is only just beginning.

“It is still too soon to make strong judgments about the specific implications of the reported supervisory agreement for the Czech banking sector. The vision for the future banking union is based on numerous pillars, and by no means just on the common supervisory mechanism. The consequences for the Czech banking industry and economy as a whole will be determined by the final form of all the individual pillars and of the banking union as a whole, especially when it becomes clear what direct and indirect financial consequences all the pillars might have,” said CNB Vice-Governor Mojmír Hampl.

The priority positions and opinions of CNB representatives on the banking union proposals are summarised clearly and comprehensively in interviews and speeches given by members of the Bank Board, which can be found on the CNB website:

Marek Petruš, CNB spokesman