A member of the Executive Board of Germany’s central bank, Deutsche Bundesbank, says in less than a month, the European Central Bank (ECB) will assume "direct supervision" for 120 of Europe’s largest banks.
At the Brookings Institute in Washington Wednesday, Andreas Dombret said 80 percent of the aggregated balance sheet of the euro-area banking system soon will be under a single regulator.
Dombret said it is the biggest step toward European financial integration since the launch of the common currency, the euro.
The ECB says its new system of banking supervision will only "take responsibility" for banks that are defined as "less-significant credit institutions."
The ECB says the system which begins operation in mid-November, will "ensure the safety and soundness of the European banking system and... increase financial integration and stability in Europe."
Europe's banking system was criticized during the recent recession for being too decentralized to effectively stabilize the troubled economies of some member nations, notably Greece.
The change will make the European Central Bank one of the world’s largest bank supervisors.