The EU Council says the European Central Bank cannot implement proposed new rules to deal with European banks' bad debt, since it lacks the jurisdiction, Reuters reported, citing a legal opinion from the council.
The legislation that governs the ECB's supervision of European banks "prevents the ECB from adopting instruments of soft law, such as the draft addendum to the ECB guidance to banks on nonperforming loans," according to the document, dated Nov. 23 and seen by the newswire. It adds that setting minimum provisioning levels is not yet included in the harmonization drive of the EU's legislative arm, it added.
The document will be up for discussion Nov. 28 during a meeting of EU states' economic envoys ahead of a monthly meeting of the bloc's finance ministers, the newswire reported, citing EU officials.
"EU states usually follow legal opinions, although final decisions are political," one official said.
Earlier, Roberto Gualtieri, the head of the European Parliament's economic affairs committee, urged the ECB to drop the proposal to impose Europe-wide regulations asking banks to deal with their bad debt.
