#AceFinanceNews – BRUSSELS – July 29 – Germany’s constitutional court is once again to be a testing ground for the eurozone’s reponse to the financial crisis as a group of academics has filed a case arguing that the banking union is illegal reported EUobserver on the July 28 in Brussels.
The five academics argue that the Banking union – a new supervisory and bank resolution system for eurozone banks – breaches German law as it was not agreed with the right treaty changes, reports Die Welt am Sonntag.
Markus Kerber, a finance professor at Berlin Technical University (TUB), told the paper that the banking union had "no legal basis in the EU treaties and so represents a breach of constitutional rights."
The supervisory system – under which the European Central Bank will, from November, oversee the financial health of around 120 banks with the power to shut them down – is the "pinnacle of Brussels power-grabbing to date", says Kerber.
The complainants, who filed their papers last week, also find that a conflict of interest has arisen because the ECB council, which also makes interest rate decisions, has a veto right on banking supervision decisions.
The challenge also calls into question the Single Resolution Mechanism, which sets out to deal with failing banks, as well as the €55bn fund meant to cover the costs of the process.