President Václav Klaus wrote an article for Monday’s Hospodářské noviny, in which he warned against the efforts of the European Union, respectively of the European Central Bank, to transfer some banking supervision powers to the European level. The head of state points to creeping centralisation and refers to expert texts by means of which the Czech National Bank resists efforts at supervision centralisation.
A few notes on that. The issue of a shift of powers to the European level of course deserves a proper discussion, but at the same time, one must know what expert (apart from the fact that he is an expert) is facing the threat of a loss, restriction or bigger supervision of his own agenda and what politician is facing a loss of power.
The right to appoint central bank governing board members without any countersignature is the president’s strongest constitutional right because it is subject to no “checks and balances”. This right has been recently reinforced by the introduction of the so-called superregulator, where the tasks of the former Securities Commission and other regulatory powers were transfered to the central bank. Václav Klaus therefore logically fears that his own powers will be restricted, he is not any impartial assessor.
The same goes for the central bank. Its “experts” have their own interests, they are facing the loss of agenda and restrictions.
Otherwise it appears logical that the Czechs in general find it unnecessary to change anything because the financial crisis broke out in the USA and in western Europe and did not bite into Czech banks. Czechs simply do not share the current political demand for a more efficient banking supervision.
However, it is necessary to realise two things. If the banking sector operates across the border to an increasing extent (in terms of ownership, capital and trade), then demand for a stronger supranational regulation is logical.
And if the Czech Republic needs a strong European engagement in the issue of energy security, for instance, then it is logical perhaps that it does not have to torpedo subjects that are actually not among its fundamental national interests. Because Europe is about compromises, searching for an equilibrium and balancing of interests. And one needs to know how to do that.
And speaking of administrative centralism: Centralism does not equal to federalism. The European Central Bank is (for now) the only European purely federal institution because, among other things, it balances the power of small and big countries to a great extent.
And if we take a look at functioning federations like the United States, we can see clearly that the powers of banking and financial supervision are divided among individual states and federal institutions. And that it is also subject to a lively discussion.
So we have actually come to the key point, that is, to the question of whether Europe is heading into a federation or not.