EU banking union plans 'a threat to London' Germany and France support putting the ECB in charge of eurozone banking regulation, meaning that the EU central bank would become the dominant supervisor for the 17 countries in the single currency giving the bloc an in-built majority to push through European financial legislation. "The possibilities foreseen under [the current EU treaty] regarding the conferral upon the European Central Bank of powers of supervision over banks in the euro area would be fully explored," said the report. Under the proposed new regime, which could be agreed by the end of the year, the current London-based EBA would become a single market watchdog for "technical standards" as regulatory power shifted to Frankfurt, Germany's banking centre. The report stresses the urgency of creating a new "single European banking supervision system" that would go beyond the role of the current EBA, which acts as an umbrella body for national banking supervisors. A spokesman for the EBA declined to comment on the proposals. The government will be also be deeply concerned at the proposal to shift responsibility for banking supervision to the EU level because decisions can have major consequences for taxpayers in terms of rescuing struggling banks. The current architecture should evolve as soon as possible towards a single European banking supervision system with a European and a national level. The European level would have ultimate responsibility," said the report. Such a system would ensure that the supervision of banks in all EU member states is equally effective in reducing the probability of bank failures and preventing the need for intervention. To this end, the European level would be given supervisory authority and pre-emptive intervention powers applicable to all banks. Both Germany and France are hostile to Chancellor George Osborne's demand for "safeguards" for the City of London after repeated calls by Britain for members of the single currency to backstop banks in order to tackle the eurozone crisis. "If we want to protect our currency we need tighter structures, this view is shared by David Cameron because the UK also suffers when the eurozone is weak," said senior eurozone official. Why should we pay a price to make safeguards to do what others ask us to do? The issue is set to explode at an EU summit on Friday because Britain has a veto over any decision to increase the ECB's supervisory role, which must be taken by unanimity.