English is set to be the main language for European bank supervision once the new common euro area banking regulator is up and running later this year, Mario Draghi indicated in a letter to the European Parliament.
Under European Central bank (ECB) rules, banks have a right to interact with the institution in any officialEU language.
However, ECB president Mario Draghi said that based on explicit agreement with the “supervised entity” then “derogation” from that was possible.
“It can be agreed to use, until further notice, English only,” he said.
Initial templates setting out how this year’s assessment of banks’ balance sheets will work have been sent to regulators in English, he said.
Banks will have a right to insist on using their own language in their dealings with the new regulator, but the comments indicate that English will be the working language under the new regime once it is up and running by the end of this year.
Historically, French has dominated, but the English language has come increasingly to the fore in part because it is widely spoken among the eastern European so-called “accession states” that joined the union in the last decade.
In the same letter Mario Draghi said that banks would not have to mark down the valuations they place on holding of government bonds to reflect market prices when this year’s probe of the strength of their balance sheets goes ahead.
“It is not foreseen” that bonds held in bank’s so called “hold to maturity” or long term investment portfolios will have to be valued based on current prices — a process known as “marking to market” — in this year’s asset quality review (AQR), Mr Draghi said.
Further details of the criteria that will apply for the AQR will be announced later this month or in early February, Mr Draghi said.