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British guerrillas against the Eurozone win a battle

The ECB's supervisory function has limits, says the European court (credit: ECB)
The ECB's supervisory function has limits, says the European court (credit: ECB)

(BRUSSELS2) The United Kingdom has started a legal guerrilla war over the regulation of the Eurozone (*). A point of view as much political as economic. The British seek to protect the interests of the City of London and emphasize that decisions taken within the Euro Zone cannot have effects outside the Euro Zone. The Court of the European Union today (4 March), at first instance, delivered a judgment which recognizes their arguments.

No mandatory localization in the Eurozone

The European judges have, in effect, annulled the Eurosystem surveillance framework published by the European Central Bank (ECB) with two main arguments. They believe that " set a location requirement within a Eurosystem Member State” to central counterparties involved in the clearing of financial securities” “ goes beyond simple monitoring (and intervenes) in the regulation of their activity ».

No general competence of the ECB

However, add the judges, the ECB “ does not have the necessary competence to regulate the activity of securities clearing systems ". Its competence is, in fact, limited by the European Treaty (article 127, § 2, of the FEU Treaty) to payment systems only. As its statutes do not no explicit reference to securities clearing (**), the court interprets the expression " clearing and payments system as being intended to emphasize that the ECB has the competence to adopt regulations with a view to ensuring the efficiency and security of payment systems., including those including a compensation phase, but does not “ no independent regulatory competence with regard to all compensation systems ».

A restrictive interpretation

The ECB had clearly argued that the mission entrusted by the European treaties to promote the proper functioning of payment systems necessarily implies having the power to regulate the activity of securities clearing infrastructures. This argument was not accepted.

A judgment that could have a political sequel

However, all is not lost for those in favor of European integration. On the one hand, this ruling is not final. An appeal may be lodged with the Court. Quite a delicate choice but which would have the merit of postponing a definitive solution. Then, the judges themselves opened a path for political revision of their position. The Central Bank could – underlines the court – request a modification of article 22 of the statutes (**), with the addition of an explicit reference to securities clearing systems…


(*) The United Kingdom had lost its first battle against bank bonuses. The Advocate General of the Court considered that this European regulation aimed at limiting bankers' bonuses was legitimate. London preferred to retreat and, very discreetly, withdrew its legal action, thus avoiding a definitive ruling... Subtle!

(**) Article 22 of the statutes simply mentions that the ECB “may adopt regulations with a view to ensuring the efficiency and soundness of clearing and payment systems within the Union and with third countries ».

Nicolas Gros Verheyde

Chief editor of the B2 site. Graduated in European law from the University of Paris I Pantheon Sorbonne and listener to the 65th session of the IHEDN (Institut des Hautes Etudes de la Défense Nationale. Journalist since 1989, founded B2 - Bruxelles2 in 2008. EU/NATO correspondent in Brussels for Sud-Ouest (previously West-France and France-Soir).

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