* Says some banks in periphery can’t pass on rate cuts
* Banking union would help address this
* Union can be achieved quickly if political will maintained (Adds quotes, details)
DUBLIN, July 25 (Reuters) - European Central Bank rate cuts are not filtering through to borrowers across the continent and a banking union is needed to address this, ECB Governing Council member Christian Noyer said on Wednesday.
A banking union with a unified supervisor, a deposit guarantee scheme and a banking resolution fund would strengthen banks in peripheral states and allow them to pass on rate cuts, which some are failing to do now, said Noyer, who is also the governor of the Bank of France.
“We cannot have a monetary union with a transmission that works so differently,” Noyer said in a speech in Dublin.
While a typical German bank is able to cut its rates in line with ECB rate cuts, a weak bank in a peripheral member state like Italy might actually increase its much higher rates if a cut in its credit rating increased its cost of borrowing.
“So our monetary policy hasn’t worked. It simply does not work. And it cannot continue like that,” Noyer said.
Euro zone leaders pledged last month to create a single banking supervisor for the bloc’s banks based around the ECB in a first step towards a European banking union .
Noyer said he believed the union could be created quickly provided the political will remains strong.
“If there is political will, as there has been in evidence, I think it can work quickly,” Noyer said.
“I was very reassured by the tone at the last summit. The political will... seemed clearly to be there,” he said. (Reporting by Conor Humphries; Editing by Stephen Nisbet)