I love how Wolfgang Schauble, the German Finance Minister, puts two effectively contradictory statements right next to each other in his FT op-ed:
It is crucial that the new system be truly effective, not just a façade. We must eschew yesterday’s light-touch approach for good and endow this supervisor with real and clearly defined responsibilities, coercive powers and adequate resources.
This also means that it should focus its direct oversight on those banks that can pose a systemic risk at a European level. This is not just in line with the tested principle of subsidiarity. It is also common sense; we cannot expect a European watchdog to supervise directly all of the region’s lenders – 6,000 in the eurozone alone – effectively.
Is a regulator really effective if some institutions remain outside its scope? Hasn’t that been one of the fundamental failings over the past 20 years that led to the financial meltdown in the first place?