Weidmann: EU banking union should involve limit for bank exposure to sovereign debt

FXstreet.com (Barcelona) - Germany's Bundesbank chief Jens Weidmann warned on Monday that the European banking union poses a risk of creating a conflict of interests between banking supervision and monetary policy.

"Both areas must therefore be strictly separated," Jens Weidmann said, speaking at the Euro Finance Week in Frankfurt. "This separation is doable, but difficult - difficult from an organizational viewpoint and difficult from a legal viewpoint."

The Buba head, who is also a member of the ECB Governing Council, called for imposing a limit on bank exposure to government debt and urged banks to support their government debt holdings with extra capital.

Jens Weidmann also pushed for distributing power in supervision voting in the European banking union depending on the given country's capital contribution to the ECB.