By Simon Miller

The House of Lords is to look into reform of the EU banking sector it was announced today.

The inquiry by the House of Lords EU Sub-Committee will examine the sector within the context of the fast moving agenda of reforms at an EU level.

It will include assessing proposals for an EU Directive on bank recovery and resolution, looking into the European Council’s vision for an “Economic and Monetary Union” as set out by President Van Rompuy, and investigating the intention of euro area leaders to create a single banking supervisory mechanism.

In its Call for Evidence, the committee said: "Although the government have made clear that the UK will not take part in the fundamental elements of a banking union, the implications of these developments for the UK cannot be ignored. The government argues that the UK’s non-participation should not and need not adversely affect London’s position as the leading financial centre in Europe, nor undermine the single market. The strength of this argument may soon be tested."

The committee is specifically asking:

• What has the euro area crisis revealed about the weaknesses of the EU banking sector?
• What are the key elements of an effective banking union?
• What needs to be included in proposals for a single European banking supervisory framework?
• What powers and responsibilities is it appropriate for the European Central Bank to possess in relation to supervision and regulation of euro area banks?
• How should the UK be responding to European proposals in this area?
• Is it realistic of the Government to say that the UK’s non-participation in a banking union need not damage London’s position as the leading financial centre in Europe?

The Call for Evidence, including a full list of questions is available here and the deadline for submitting written evidence is Monday 1 October.

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