By Simon Miller

European Central Bank (ECB) member Joerg Asmussen has hit out at the markets for pricing-in a euro break up.

Speaking at a conference in Frankfurt, Asmussen said that it was unacceptable that markets appeared to be placing an exchange rate risk into the currency union.

He commented: "The risk premia of sovereign bonds now reflect not just the insolvency risk of some countries but even an exchange rate risk, which there should not theoretically be in a currency union."

Asmussen added: "The markets are pricing in a break-up of the euro zone. For a currency union, such systemic doubts are not acceptable."

The ECB policymaker also suggested that the planned euro-zone banking supervisor should start with Europe wide, systematically relevant banks.

Asmussen commented that it was "reasonable, at least at first, to limit European oversight to institutions that are systemically relevant nationally and Europe-Wide".

He added that following this, all eurozone banks should be overseen by the beginning of 2013.

In an interview on German radio on Monday, the country's finance minister Wolfgang Schaeuble said that placing all eurozone banks under ECB supervision would be difficult.

Instead, Schaeuble suggested that the EU only put larger banks under the ECB remit to begin with.

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