Britain is pushing for changes to a proposed euro zone banking union to dilute the power of the European Central Bank, EU officials said, potentially hampering efforts to build the infrastructure urgently needed to underpin the euro.
The European Commission has proposed making the ECB responsible for supervising lenders as a step towards a banking union where chiefly euro zone countries would jointly tackle problem banks and shield savers’ deposits.
But last month’s Commission proposal, central to closer economic integration in the currency area, has encountered opposition in Britain, Europe’s biggest financial center, that could delay or even derail banking union.
Britain intends to propose a system that would give countries outside the banking union the possibility of blocking those within the project from clubbing together to shape EU-wide regulations, said EU officials, speaking on condition of anonymity.
“The concern is that the Bank of England can find itself outvoted by the ECB on aspects of rule making,” said one official. Britain will not join the banking union. The Bank of England will become the UK regulator next year.