Proposals for a European Banking Union must be redesigned to provide a more accountable and effective institutional framework

The EU’s proposed banking union is seen by many as the first step towards resolving the eurocrisis, and under current proposals, by 2014 the European Central Bank (ECB) will be responsible for supervising over 6,000 banks in Europe. Kern Alexander has serious concerns about the accountability and capacity of the ECB in this potential role, and argues that its primary focus of maintaining price stability in the eurozone through monetary policy is very different to that of banking supervision. In order for them to be effective, the proposals must be strengthened with greater mechanisms to ensure that the ECB is adequately accountable for its supervisory decisions.