EU: Centralised economic governance and bank supervision may lead to new crisis

 José Manuel Barroso, President of the EC (left), giving a joint press conference with Herman van Rompuy, President of the European Council on the results of the Extraordinary European Council on the Multiannual Financial Framework (MFF) 2014-2020. (EC Audiovisual Services)

José Manuel Barroso, President of the EC (left), giving a joint press conference with Herman van Rompuy, President of the European Council on the results of the Extraordinary European Council on the Multiannual Financial Framework (MFF) 2014-2020. (EC Audiovisual Services)

In the first Economic and Financial Affairs Council (ECOFIN) of the year on January 22, the two first and more important items on the agenda were the “enhanced economic governance and policy coordination” (the “two-pack” economic governance) and secondly the “financial regulation and bank supervision”. On both accounts the Council made giant steps forward setting the path for their quick realisation.

Not to forget that the full operational function of only those two new EU mechanisms, can transform the Eurozone and the European Union from associations of countries into a single economic and in many respects political union, introducing common decision-making procedures in the fiscal and credit fronts.

Once the member states concede the approval of their government budgets to the European Commission and the oversight of their banking industry to the European Central Bank, their national sovereignty would be irrevocably restricted. The problem is that those two super-mechanisms, the European Commission and the European Central Bank, haven’t got full democratic accountability. Unfortunately very few people seem to be worried about that, not including two influential EU leaders as Manuel Barroso and Herman Van Rompuy, who have being absorbed by their bureaucratic role and have forgotten their political past.

Once the willing member states accept that their national budgets will first be approved by the Commission and then be introduced in their Parliaments their national sovereignty in this crucial issue will be lost. The same is true for the supervision of the banking sector. After the national supervisory authorities are sidestepped and ECB undertakes the role of the pan-European banking supervisor, the link between national governments and the country’s banking industry will be cut off.

In many respects, on both accounts (state budgets and banking industry) central controls may be proved proactive and contain possible mismanagement and short-sighted practices by national authorities. But in the long run the lack of direct democratic accountability in both those central entities (EU Commission and ECB) will create a new generation of problems related to the integrity, the transparency and the unbiased character of their everyday function. Judging from what we have seen so far there are great risks in all those fronts.

For one thing the European Commission being a bureaucratic and not directly accountable body, with wide-ranging arbitrary powers tends to favour the strong and the flexible. Coming to the ECB, as of its nature it tends to be influenced by the “systemic” banking groups of the central countries. Unfortunately there is a basic lack of built-in openness and democratic control over both bodies, the Commission and the ECB. And this fact may lead to a new generation of institutional crisis in the future.

 

 

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

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

How the inventor of the internet plans to make it safe and accessible for everyone

External action: more funds for human rights, development and peace

China invites the EU to a joint endeavor for free trade and order in the world

EP President praises Nobel Peace Prize award to Denis Mukwege and Nadia Murad

Talent is worldwide. Opportunity is not. How can we redistribute it?

Prosecution of Paraguay judges over peasant ‘massacre’ ruling could undermine rule of law: UN expert

The EU pollution rights trading system frozen

Amsterdam has a bubble barrier to catch canal plastic

EU Parliament: A catastrophic crisis management by European leaders

Who and why want the EU-US trade agreement here and now

Cédric in India

Brexit talks stalled at launch; issues with European Court’s authority in Britain

5 amazing people fighting to save the oceans

MEPs propose measures to combat mobbing and sexual harassment

How a more integrated approach could help to end energy poverty

UN chief welcomes new Government in Lebanon, after eight-month impasse

Why Africa must be ready to take the quantum leap

7 ways for businesses to capture the youth dividend

Alarming number of women mistreated during childbirth, new UN health agency figures show

Yemen war: UN-backed talks to silence the guns due to begin in Stockholm

Ocean life faces ‘onslaught of threats’ from human activity, but tools exist to save it

Why Eurozone urgently needs the ECB to print and distribute at least €500 billion

115 rejections and no pay. What it really takes to be an entrepreneur

The UK to split if May’s hard or no-deal Brexit is pursued

European car industry: The Germans want it all

Idea of ‘homogenous’ Polish culture is a myth: UN human rights expert

EU and African leaders to jointly tackle the migration crisis across the Mediterranean

Building a stronger Europe: new initiatives to further boost role of youth, education and culture policies

Deadly swine fever threatens Asia, UN agriculture agency warns, urging regional collaboration

Now doctors can manipulate genetics to modify babies, is it ethical?

Migration crisis will keep deteriorating as common EU political will is simply not there

UNIDO promotes post-harvest excellence for mangoes in the Mekong River Delta of Viet Nam

Why is the World Health Organisation so much needed?

‘Path to peace’ on Korean Peninsula only possible through diplomacy and full denuclearization: US tells Security Council

Multilateralism more vital than ever, as World War centenary looms: Security Council

EU helps tackle air pollution in Kosovo with €76.4 million

European Junior Enterprise Network – Ready to take the Step Into the Future?

YO!Fest back in Strasbourg for the 2nd edition of the European Youth Event – 20-21 May 2016

Don’t let smoking steal life’s breathtaking moments, urges UN health agency

Africa must ‘value youth’ in the drive towards lasting peace, young envoy tells Security Council

Parliamentary bid to democratize Myanmar constitution a ‘positive development’ says UN rights expert

After globalization what? Europe’s long, straining shake-up post Davos wreckage

The five stages of the Chief Digital Officer – and why they often fail

Bram in Colombia

Labels for tyres: deal for greener and safer road transport

EU Budget: InvestEU Programme to support jobs, growth and innovation in Europe

EU shapes its ambitious strategy on India

EU on track to end use of chemicals harming the ozone layer

What the future holds for the EU – China relations?

Climate change: Direct and indirect impacts on health

EU Parliament shows its teeth in view of 2014 elections

Only one in five countries has a healthcare strategy to deal with climate change

CHINA: five letters that could mean…

An economist explains why women are paid less

2018 Golden Pen of Freedom Awarded to Maria Ressa of the Philippines

Brexiteer May gets lip-service from Trump and Turkish promises from Erdogan

Climate change brings a host of other risks for businesses

Oslo leads the way in ‘Breathe Life’ campaign for cleaner cities in climate change era

These are the places with the most climate change deniers

The world is facing more disasters. This is how data can help us reduce that risk

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