The European Commission is looking at whether German bank regulator BaFin may be inhibiting free movement of capital by the way it enforces liquidity rules. BaFin's policy that banks - including subsidiaries of foreign lenders - keep sufficient liquidity for their German operations has drawn criticism from pan-European lenders.
"The Commission and the (European) Banking Authority in London are keeping close tabs on some measures being adopted by national supervisors and we are following this very closely," a spokesman for European Commissioner Michel Barnier said.
"We are looking at what various different supervisors have been doing, including what is being done in Germany," he said on Thursday.
German daily Handelsblatt reported that units of foreign banks with plenty of liquidity were being prevented from transferring funds to their struggling parent companies because of BaFin's rules.
The Bank of Italy is said to have raised the issue about BaFin with the European Banking
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