Long live Eurozone’s bank supervisor down with the EU budget supremo

Joint press conference by Olli Rehn, Mario Draghi and Margrethe Vestager on the meeting of the G20 Ministers for Finance

EU leaders in their last summit of mid-October appeared ready to make another systemic blunder. After creating a limping Eurozone, with a common currency but not common rules for sovereign debt issues, now they discuss the institutionalisation of a common EU budget and a Brussels “supremo of Finance”.

And all that with no political legitimacy. In this way they are about to create a new false European Empire, where the politician who will control public spending in the 17 “provinces” (the Eurozone member states), will refer not to the people, for whom he or she will preside over their fiscal realities.

Such an arrangement will not only put the “cart before the horse”, but it will defy the basic rule of democracy, which demands that the politician(s) (governments) who control public spending and promulgates taxes must be directly elected by the people, work for the people and be accountable to the people. This is the linchpin of our contemporary European democratic institutions, being founded in the city of Athens two and a half millennia ago.

We Europeans, we abolished the absolute authority of our kings and emperors, exactly because we wonted the executive authority to be accountable to the people over the way taxes are levied and then spent. Today the vote of the yearly state budget in all EU member states parliaments, constitutes  the basic democratic process and makes the elected governments and politicians accountable to people.

The new “EU budget supremo”, being probably the Commissioner responsible for finance, as Ollie Rehn is nowadays will be accountable to a kind of qualified majority in the EU leaders council, but not directly to people on behalf of whom he or she will be making crucial decisions. This lack of democratic legitimacy of an EU budget “minister” will soon lead to a series of problems and contradictions and will undermine the entire service. People and political parties all over the Union will at some point question this central budgetary authority and set ablaze the entire EU edifice.

Unlike this questionable idea of a central EU budgetary authority, the creation of a central bank supervision mechanism in Eurozone, under the European Central Bank, is a badly needed EU institution for years now. If it existed it could have prevented not only the undercapitalisation of Eurozone’s banks but probably could have also arrested the over-borrowing of governments. As it is well known national governments have been borrowing mainly from their country’s major banks, as it is the case in Greece, Portugal and Italy.

In such a context a central banking supervision scheme could have also prevented the big banks from over-exposing themselves to certain sectors of the country’s economy, as it is the case in the Spainish construction sector. As for the legitimisation of the authority of ECB in controlling a central banking supervision scheme, there can be no objection, given that the central bank is the issuer of the currency and the guarantor of sane monetary policies. Who else can be more competent, in securing the bank supervision service than the ECB?

On top of that the central bank can guarantee that there would be no dark pages hidden in the balance sheets of the major national banks, nor cover up of practices related to grey areas of unspoken national interests. There is no question that the Eurozone banking sector will be much more reliable and sane under the supervision of ECB than it is today under the control of national authorities. National controllers are usually looking the other way, when the country’s major banks are taking the wrong path. This was exactly the case when the Spanish banks in 2008 convinced their depositors, to invest their life savings in junk bonds and worthless preferred stocks of a total nominal value of at least €25 billion and zero value today. The bankers new they were actually “stealing” the money.

Luckily enough the EU leaders in their mid-October gathering set a solid foot-path for the creation of the Eurozone central bank supervision mechanism to be operational in some months, while leaving the idea of an EU budget “minister” to the distant future.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Here’s how data can shine a light on financial crime

The Schengen area is at a crossroads

These countries have some of the highest voter turnout in the world

Brexit: European Commission publishes Communication on preparing for the UK’s withdrawal from the EU

Towards a tobacco free India

Youth2030: UN chief launches bold new strategy for young people ‘to lead’

The MWC14 Sting Special Edition

What is hydroponics – and is it the future of farming?

First peaceful transfer of power in DR Congo ‘an extraordinary opportunity’ for advancing rights

UN forum spotlights cities, where struggle for sustainability ‘will be won or lost’

World Health Organisation and medical students: is there any room for improvement?

“France will be there, it will always be there!”, French President Hollande says in a rather disorganised speech; the Sting reports live from World Economic Forum 2015 in Davos

Is there a cure for corruption in Greece?

Fashion’s hot new trend: clothes you don’t need to wash (very often)

The EU Consumer Policy on the Digital Market: A Behavioral Economics View

Congolese expelled from Angola returning to ‘desperate situation’: UN refugee agency

What do the economic woes of Turkey, Argentina and Indonesia have in common?

Parliament wants to suspend EU accession negotiations with Turkey

Why Indian students are going abroad to become Doctors?

Office workers in these economies clock up the most extra hours

The Franco-German axis considers that all EU needs now is more armaments

Cancer is a growing global threat and prevention is key, UN study shows

How Hawaii plans to be the first US state to run entirely on clean energy

The secret weapon in the fight for sustainability? The humble barcode

Athens searches frantically for a new compromise between politics and economic reality

We need a fresh approach to climate change migration. This is why

‘Warp speed’ technology must be ‘force for good’ UN chief tells web leaders

Gaza probe finds ‘reasonable grounds’ Israeli forces committed international human rights violations

Report on EU trade defence – effective protection against unfair trade

EU job-search aid worth €9.9m for 1,858 former Air France workers

FROM THE FIELD: Survival in Yemen against all odds

Four million Syrian children have only known war since birth: UNICEF

MEPs list conditions for new EU-Azerbaijan deal

10 million Yemenis ‘one step away from famine’, UN food relief agency calls for ‘unhindered access’ to frontline regions

Paris, Washington, IMF against Berlin and ECB on money and interest

Future fit: 3 ways fashion can be more sustainable

FROM THE FIELD: Faces and Voices of Conflict

UN agencies welcome green light for Rohingya projects in northern Myanmar; urge ‘more effective access’

North Korean families facing deep ‘hunger crisis’ after worst harvest in 10 years, UN food assessment shows

Why capital markets have no more reservetions about Eurozone

SMEs and micro firms sinking together with south Eurozone

Innovation can transform the way we solve the world’s water challenges

UN says ‘many humanitarian achievements’, one year after ouster of ISIL from Mosul

The Brexit factor in the US-China trade war and other conflicts

‘Continuing absence’ of political solution to Israel-Palestine conflict ‘undermines and compounds’ UN efforts to end wholesale crisis

GSMA Announces Speakers for Mobile 360 – Russia & CIS 2018

The Brits are not an exception and that’s why they voted to leave

Fighting forest fires in Europe – how it works

European Semester 2018 Spring Package: Commission issues recommendations for Member States to achieve sustainable, inclusive and long-term growth

In Rome you can swap plastic bottles for metro tickets

EU Budget: A Reform Support Programme and an Investment Stabilisation Function to strengthen Europe’s Economic and Monetary Union

Fairness in the food supply chain: Commission proposes to increase price transparency

Meet Alice, the battery-powered plane that could herald the age of electric air travel

Eurozone slowly but surely builds its Banking Union

Ten reasons to be optimistic in 2019

Another doomed EU attempt to interfere in Libya?

Facebook/Cambridge Analytica: MEPs pursue personal data breaches probe

Inclusion, equality a must for ‘long-lasting peace and sustainable development’, UN official tells high-level event in Baku

Satellites and data are going to help us phase out fossil fuels. Here’s how

These are 2018’s stats of the year

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s