The Financial Times reports that a proposal will be tabled today by the European Commission to strengthen the powers of the European Banking Authority which would hand supervisory control over the City of London to the European regulator.
The proposals, which would give the EBA the power to resolve disputes that affect all EU member states, are a key part of plans to give the European Central Bank responsibility for supervising all 6,000 eurozone banks by 2014 ahead of full banking union.
If the reforms are agreed, it would mean the EBA’s decision on cross-border supervisory disputes would be binding unless a majority opposes it, including three euro area representatives and three non-euro area representatives. This would make decisions harder to block than is currently the case.
The reform plans will now be negotiated by member states in a bid to agree a text by December. To be passed the reforms have to be agreed by the European parliament and a qualified majority of EU member states.