EU bank supervision project stalls over powers

(STRASBOURG) - An EU project to create pan-European watchdogs to police the financial sector hit a snag Tuesday as negotiations between EU lawmakers and states stalled over how much power to give them.

The European Parliament postponed a vote on the plan until September to give negotiators more time to reach a deal on what authority to grant to the agencies, which would oversee banks, insurers and markets.

EU states want power to ultimately rest in the hands of national agencies while the European parliament seeks to give the new cross-border authorities enough influence.

Britain, fearful that supervision of the London financial centre by Brussels would end up costing it taxpayers' money, secured in December safeguards that would give states a de facto veto on decisions made by the new bodies.

"No agreement is possible with the 27 (EU states) if we cannot establish European oversight authorities," said the head of parliament's Liberal bloc, Belgium's Guy Verhofstadt.

The creation of the supervisory bodies is a key plank of Europe's efforts to protect the continent from future financial crises.

EU financial services commissioner Michel Barnier piled the pressure on governments to reach a deal with parliament after the two sides negotiated for hours without success.

"The ball is in their court," said Barnier, who called for an "intelligent and credible agreement."

Barnier said he hoped progress would be made at a meeting of European finance ministers next Tuesday in Brussels, which could mark a "key stage" in the negotiations.

The European Parliament will vote Wednesday on a political declaration stating its position in order to pressure governments into finding a compromise, said Social Democratic lawmaker Udo Bullmann.

The parliament "always has a level of demands that is clearly higher than what the (European) Council proposes," said Liberal European MP Sylvie Goulard.

"What is bothersome among some people is this sort of refusal that the supervision could take place at the European level," she said.