Self-regulation and light-touch supervision have failed Europe's financial sector and left to its own devices the market will "self-destruct", Wolfgang Schaeuble said in an opinion piece published on the FT's website.
"It is crucial that the new system be truly effective, not just a facade. We must eschew yesterday's light-touch approach for good and endow this supervisor with real and clearly defined responsibilities, coercive powers and adequate resources," he said.
European Union leaders agreed in June to set up a single banking supervisor for Europe centred on the European Central Bank.
It is hoped the planned supervisor will help break the link between the euro zone's debt crisis and the region's struggling banks.
The European Commission, the executive arm of the EU, will present a detailed proposal on Sept 12 to give the ECB oversight of all banks in the euro zone from January next year.
Schaeuble said, however, it was "common sense" to only monitor systemically relevant banks that pose a risk to euro zone financial stability and not all 6,000 of the region's lenders.
Details have yet to be agreed about how the ECB will work with local regulators in individual countries and with the existing European Banking Authority, the pan-EU watchdog.
source The Economic Times
That's not a watchdog... that's a wolf!