German finance minister Wolfgang Schauble has called for a European bank supervisor who is effective and 'not just a facade.' The supervisor should focus on banks with systematic risk, Schauble wrote in the Financial Times.

Schauble stated that the bank supervisor to be created by the European Central Bank (ECB) should directly oversee banks that pose a systematic risk Europe-wide. It's "common sense, we cannot expect a European watchdog to supervise directly all of the region's lenders — 6,000 in the Eurozone alone — effectively," Schauble said.

However, an opposing view was expressed by the European Commissioner for Internal Markets and Services Michel Barnier, who told German daily Suddeutsche Zeitung that all Eurozone banks would gradually come under the oversight of the new common supervisor by 2014.

Another regulatory matter under discussion is banker bonuses. Schauble proposed that banker bonuses should not exceed their fixed salary and for shareholder approval to be required for longer-term incentive plans.

"Just as we need to set incentives for managers to act in the long-term interest of their banks, we must set the right incentives for the creditors and shareholders that finance banks," wrote Schauble.

MD

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