The power to shut down banks would be centralised in the European Commission. Brussels would have the clout to overrule the bank’s home country and use funds from a central pot. The blueprint for the resolution authority is due to be published this month. While the details remain in flux, the discussion paper, provided for a debate between EU commissioners, indicates that Brussels is not trimming its ambitions to suit German objections. The paper argues that “the commission is the best placed institution to adopt all relevant decisions related to resolution with a discretionary nature". A newly created resolution body would prepare, propose and enforce decisions via an executive board – dominated by nominees from the commission and European Central Bank, rather than Member States.
The commission wants the resolution authority to “be equipped with a single bank resolution fund”. The fund would have the power to borrow from markets, using the “assets of euro area banks” as a guarantee and backstop. "This would provide substantial synergies and enhance financial stability, compared to a mere network of national resolution funds, by pooling resources from and for all participating banks”, the paper said.
One of the few concessions to Berlin regards the administration of resolution decisions. Once the commission decides that a bank should be shut down, the resolution is implemented by Member States under “the oversight of the central body”.
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