Germany’s governing coalition has backed down in its fight with the European Central Bank over monitoring banks – and the Federal Financial Supervisory Authority, known by its German acronym Bafin, is suffering as a result.
The core issue was the proposed legislation by the European Commission to put in place new regulations to wind down credit institutions in Germany.
The goal of this legislation is simple: Banks should never – due to their huge size – be able to force states to rescue them with taxpayer money. It should be possible to liquidate them without endangering overall financial stability.
But ECB officials got heated up in a hearing on Germany’s so-called “liquidation mechanism” law. Central bank officials argued it was just one more example of the European Union’s hodgepodge of regulations that vary between the 28 member nations.