European Union member states have failed to appoint Luxembourg's top central banker to the executive board of the European Central Bank after Spain raised objections to the move.

The member states were expected to approve Yves Mersch joining the six-person board over the objections of the European Parliament today.

But officials said Spain unexpectedly voiced concerns.

The issue will now be left to the EU leaders at their November 22-23 summit, or a later one in December.

The EU Parliament voted against Mersch's appointment last month to protest the lack of women among the ECB's top echelons.

ECB probes claim over Spanish bank loan rate

The European Central Bank has launched an internal investigation into whether it broke its own rules and lent money to Spanish banks on terms far more generous than those offered to Irish banks.

The ECB inquiry relates to the collateral received in exchange for nearly €17 billion worth of loans.

Spanish banks are reported to have offered collateral that the ECB accepted as being more credit-worthy than it actually was and so offered the Spanish banks a preferential discount - effectively a cheaper loan.

An ECB spokeswoman confirmed the collateral examination following a report in German newspaper Welt am Sonntag yesterday, which revealed the Spanish banks should have received the same discount as Irish banks.

The newspaper said that if they had been, the affected banks could have had to produce up to €16.6bn more in collateral.

The collateral the Spanish banks offered was over €80bn in Spanish treasury bills, which were accepted under top-notch A rating credit-worthiness, and at the lowest risk premium of just 0.5%.

However it would appear the bonds should have been rated as B-, which would imply a risk premium of 5.5%; the same as Irish bonds.

The ECB's anti-crisis measures have pushed its balance sheet to more than €3 trillion, more than double its level before the Lehman crisis four years ago.

Much of the increase is the result of cheap loans to banks, but the ECB has long insisted that its balance sheet is safe precisely because of its collateral rules.