Bavaria's Minister for Economics, Martin Zeil (FDP), has demanded a restriction of the European banking supervision on banks that are important for the economic system and internationally active.

"I am against the proposal of the EU-Commission to transfer the banking supervision of all banks of the eurozone," Zeil said.

In Germany, there are many small and medium-sized banks, which provide services throughout the country. These banks in particular performed quite well during the recent bank crisis. This banking system is the backbone of financing Germany's small and medium enterprises. The supervision of these banks is executed by the regional offices of the 'Bundesbank' (German Central Bank). A centralised supervision by the ECB would have a negative impact on the German banking system that includes local 'Sparkassen' and regional banks.

Zeil has suggested limiting the banking supervision of the ECB to internationally active banks that are "relevant to the economic system".

The Bavarian Minister is not suggesting that the German national banking system go unsupervised. While he wants all banks to officially be under European banking supervision, the day to day work of the small and medium-sized banks would continue, as they are now, to be regulated domestically.

For Zeil, the main function of the European banking supervision is to prevent the possibility of a future crisis. Additionally, it is important that the ECB, as the institute for European banking supervision, stays independent.