Bulgaria Should Stay Out of EU Banking Union: C-Bank HeadBulgaria in EU | June 28, 2012, Thursday // 14:16| views
The Bulgarian central bank stepped up criticism of proposals for an EU banking union, insisting that they concern euro zone members only. Photo by BGNES
Bulgaria's central bank governor has attacked proposals for an EU banking union, saying that the extension of banking supervision across the bloc is a premature step.
"The banking union plan is a very interesting idea. It is very important however to steer clear of rash decisions and make sure that these proposals concern the euro zone members only," Bulgaria's Ivan Iskrov told reporters.
"At this stage Bulgaria has to stay out of the banking union. There are still many questions marks over its structure and besides each country should bear personal responsibility for its policy," the central bank governor added.
The Czech government has also attacked the banking union plan, saying it could damage its economy.
Economic heavyweight Britain, which is also outside the euro zone, has voiced fears that the banking rules could rob them of sovereignty and damage their economies.
Eastern European countries fear capital drain as the majority of their banks are owned by less well capitalized parent banks in euro zone members.
In Bulgaria, some of the biggest lenders are managed by Italy's UniCredit, Greece's National Bank of Greece, Hungary's OTP and Austria's Raiffeisen.
Other Greek banks present in Bulgaria include EFG Eurobank, Piraeus, Emporiki and Alpha Bank.
Experts have warned that Bulgaria, the European Union member boasting one of the the bloc's smallest budget deficit, risks seeing its banks sucked under by the fiscal sins of neighboring Greece.
Until now Bulgaria's central bank and finance minister have repeatedly tried to assuage fears over funds outflow from Greek bank subsidiaries in the country to headquarters in Greece, saying this is part of the free movement of capital.
A failure by all EU members to agree on EU bank regulation would undermine prospects for any changes which could in any case take years to implement.
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