BNB Governor: We shouldn't rush joining the European banking union

"There is no benefit for Bulgaria in joining the European banking union hastily," said Ivan Iskrov, Governor of Bulgarian National Bank (BNB), in a speech to mark the start of the new academic year for the University of National and World Economy. The proposed creation of a banking union is a popular idea only among the euro zone member states as part of a series of measures the EU is considering in its effort to improve the co-ordination and supervision of the region's banking system. According to Iskrov signing up to the project before the singe currency has been adopted will lead to a transfer of sovereignity to Brussels and Frankfurt, not a beneficial development for Bulgaria.

Last week, the European Commission (EC) proposed expanding the powers of the European Central Bank (ECB) to make it the highest authority in matters of supervision as far as financial stability of all euro zone banks is concerned. The idea is for national institutions to remain a vital part of the day-to-day regulation and the preparation and enforcment of ECB's decisions.
The ECB will be responsible for licensing of creditors and ensuring compliance with capital recquiremens. The Frankfurt based regulator will be able to intervene at an early stage when a bank is breaking or in danger of breaking rules that set minimum capital ratios. Under the EC proposal countries that aren't using the euro yet can choose to join the banking union at their own free will.

"Some form of banking union is probably inevitable and we are supportive of the idea on an euro-zone level. However, our view is that EU countries outside the monetary union shouldn't rush the matter," Iskrov said.

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