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

the sting Milestone

Featured Stings

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

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

Can the next financial crisis be avoided?

A week to decide if the EU is to have a Banking Union

Violence on the rise in Darfur following Sudan military takeover, but UN-AU peacekeeping mission maintains ‘robust posture’

Help prevent children ‘from becoming victims in the first place’, implores Guterres at campaign launch

EU Telecoms deal: Fees on calls across the EU capped and 5G network by 2020

The Energy Union: from vision to reality

Terrorist content online: MEPs agree to start negotiations with EU countries

Historic first, as Tolstoy’s War and Peace lands in Geneva, to mark international centenary

MEPs take stock of the EU’s foreign, security and defence policy priorities

Commission: Gifts of €6 billion and free trainees to ‘help’ poor employers

In tech-driven 21st century, achieving global development goals requires closing digital gender divide

Thousands returning to Nigeria’s restive Borno state ‘at risk’; UN ‘gravely concerned’

The psychology of pandemics

Europe bows to Turkey’s rulers, sends Syrian refugees back to chaos

Why is the EU launching a doomed policy in stopping immigrant waves? What are the real targets?

Access to healthcare: what do we lack?

EU budget deal struck with Parliament negotiators

The quality of health education around the globe

Banking package: Parliament and Council reach an agreement

Merry Christmas from Erdogan, Putin, Mogherini and the Polish firefighter

‘Counter and reject’ leaders who seek to ‘exploit differences’ between us, urges Guterres at historic mosque in Cairo

The hidden risk of virtual reality – and what to do about it

‘Staunch support’ for Iran nuclear deal tempered by concern over missile testing

Afghanistan: Civilian casualties exceed 10,000 for sixth straight year

In New Zealand it takes less than a day to start a business

A Sting Exclusive: “eHealth can change many dimensions of how the healthcare area functions”, Polish MEP Michal Boni underscores from Brussels

EU humanitarian budget for 2020 to help people in over 80 countries

Greenhouse gas emissions have already peaked in 30 major cities

GSMA Mobile 360 Series – MENA in Dubai, in Association with The European Sting

Deeper reforms in Korea will ensure more inclusive and sustainable growth

Parental leave: why we can’t wait a century for equal rights for women

Young people struggling in digital world, finds latest OECD PISA survey

‘Multi-generational tragedy’ in Israel and Palestine demands political will for two-State solution

‘We cannot lose momentum’ on the road to peace in Yemen, UN envoy warns

Conflict diamonds and climate change: Cooperate, don’t compete over natural resources urges Guterres

UN working with both sides, after hidden tunnels confirmed along Lebanon-Israel ‘Blue Line’

These cities score an ‘A’ for environmental action – but hundreds more are falling behind

Joint advocacy letter template to sign and ratify the Treaty on the Prohibition of Nuclear Weapons

Solutions for cultural understanding: medical students’ perspective

Nature is our strongest ally in ensuring global water security

Forward Agenda: What can we expect from 2019?

5 things you need to know about creativity

Pakistan: UN strongly condemns terrorist attack that leaves scores dead and wounded at election rally

Discussions kick off among MEPs and national MPs on economic governance

Number of MEPs to be reduced after EU elections in 2019

Britain, EU take edgy steps to unlock Brexit talks as the war of words rages

DR Congo: Insecurity and attacks mean Ebola will keep spreading, warns world health agency

Youth employment crisis easing but far from over

As Libya talks resume in Geneva, UN negotiator seeks to overcome sticking points

Tools of asset development: Renewable Energy Projects case

UN agriculture agency digs in to help forests and farms build resilience to climate change

‘Multiplicity’ of rights violations in Ukraine as fifth winter of conflict bites

Haiti: ‘Laden with challenges’ but also hope, Mission chief tells Security Council

If people aren’t responding to climate warnings, we need to change the message

Trump aims trade offensive solely to China, renews truce with EU

Tackle ‘unacceptable inequalities’ in cancer care, saving up to seven million lives, WHO urges

Atomic agency cites concerns over Iran testing sites, offers COVID-19 assistance

Delhi Declaration: Countries agree to make ‘land degradation neutrality’ by 2030, a national target for action

Will Western Balkans respond positively to EU initiatives?

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