EU prepares a banking union amidst financial ruins

Press conference by Michel Barnier, Member of the European Commission, on taking action on shadow banking to avoid new sources of risk in the financial sector, 19/03/2012. (EC Audiovisual Services).

Press conference by Michel Barnier, Member of the European Commission, on taking action on shadow banking to avoid new sources of risk in the financial sector, 19/03/2012. (EC Audiovisual Services).

There was no better opportunity than now, to observe how unfounded and shallow the institutional structure of Eurozone was, probably for the big guys to do whatever they liked. At a time when the Cyprus banking sector threatens to drive the whole island to a shipwreck, the European Parliament, the Council and the Commission are concluding a deal over future banking supervision and they congratulate themselves for their …prudency. Reading this agreement between the three most important EU bodies in verso, it becomes obvious that there was not any kind of central control over Eurozone banks and every one of the 17 countries could let its lenders have it their way.

In this environment Cyprus banks were left free to inflate themselves to the point where they ‘produced’ almost half the GDP of the Republic. The Cyprus authorities didn’t have any incentives to place the tiny country’s big banking industry under control and let them accumulate assets and liabilities by eight times the annual GDP of the island. Of course Cyprus is not the only Eurozone member to have let grow its banking sector without any prudential controls and rules.

Cyprus like the others

Ireland and Spain are the other two Eurozone countries to have tasted the bitter repercussions of an overgrown banking sector’s failure, following a long period during which the industry went rampant. In this respect Ireland, Spain and Cyprus are the three countries which had the misfortune to see the end of this path to catastrophe. There are others however that may follow suit. Unfortunately there is plenty of time for more banking tragedies to be staged before the banking supervision is meticulously performed by the European Central Bank or the European Banking Authority acquires any tooth.

As if nothing happens in Eurozone’s banking industry last Tuesday a deal on banking supervision legislation, “that will strengthen EU-level oversight of many EU banks” was struck by Parliament and Council negotiators.  As the EU legislative’s Press release puts it, “Parliament’s negotiators inserted many provisions strengthening the system’s transparency and accountability. They also ensured that its working structures will be imbued with a European spirit, rather than reflecting just a sum of national interests”.

In the meantime, entire countries are on the verge or are languishing to avoid total financial collapse, because their banking sector profited from the lack of any kind of supervision in Eurozone. Apart from the dividends in terms of employment and lucrative private incomes the banks offered in many countries, national governments had profited also from an open borrowing line in the local financial system. This was the case of Greece and Italy and who is to say where else.

Despite the banking ruins all over Eurozone’s periphery, European Commissioner Michel Barnier didn’t want to miss the opportunity to boost about the twenty years delayed banking union. He said:”With today’s agreement, a fundamental pillar of banking union has been put in place: I would like to thank the European Parliament whose constructive attitude has allowed an excellent final result to be reached in record time. I am confident that the European Parliament will soon confirm its agreement in a plenary vote”.

Only big guys allowed

If this is not a proof that main European bodies, like the European Parliament and the Commission appear some times as living in another planet, then reality has been exorcised from Brussels. Probably this was done on purpose, that is leaving the banking field without rules, so as the big guys can do whatever they wanted. Somebody forgot however that even the little guys can profit from the ‘anything goes’ environment. Now the big guys want to have the ECB protection only for them, that’s why they show the exit to Cyprus. It’s a clear message for the other small players to see what can arrive also to them, and get wise.

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

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

Will Qualcomm avoid Broadcom’s hostile takeover post the 1 bn euro EU antitrust fine?

Draghi joined Macron in telling Germany how Eurozone must be reformed

Plastic Oceans: MEPs back EU ban on polluting throwaway plastics by 2021

The ‘abuse of food relief in Yemen’ must end now

Halt death sentences on children, UN rights expert urge Saudi authorities

Global immunization is having its annual check-up. What can we learn?

As the year closes out, UN political chief talks the art of diplomacy – and crises to watch in 2019.

Ukraine pays the price for lying between Russia and the EU

The EU Commission by serving the banks offers poor support to European mainstream political parties

France sneaks into the Geneva US-Iran talks to claim its business share in Tehran

How to keep our cities cool as temperatures rise

Parliament adopts its position on digital copyright rules

Antitrust: Commission fines Google €4.34 billion for illegal practices regarding Android mobile devices to strengthen dominance of Google’s search engine

The Irish Presidency bullies the Parliament over EU budget

Mental health problems costing Europe heavily

Anti-vaccers: does the empty can rattle the most?

Clean energy will do to gas what gas has done to coal

WHO and IFMSA as transcendent pillars for world improvement

The Oslo model: how to prepare your city for the electric-vehicle surge

Is Eurozone preparing to abandon austerity and stagnation?

Lessons from the Global Entrepreneurship Index

EU Parliament: It takes real banks to fight unemployment and recession

EU-India summit: Will the EU manage to sign a free trade agreement with India before Britain?

UK: Crawley group wins European Citizens’ Prize

Multilateralism: The only path to address the world’s troubles, signals Guterres

The EU Parliament sidesteps the real issues about banks, while the US target the Eurozone lenders

Easing funding woes for UN agency assisting Palestine refugees a ‘wise investment for today and the future’

In Tokyo, UN chief expresses full support for US-Japan dialogue with North Korea

A Sting Exclusive, the European Commissioner for Energy Günther Oettinger writes for the Sting on “EU Industry: a major energizer”

The EU Commission predicts a decimated growth in the next years

There’s a global learning crisis and it’s leaving millions without basic skills

European Union disenchanted with Turkey

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

Education expenditure in the EU not hurt much by crisis

UN chemical weapons watchdog adds new powers to assign blame, following attacks

7 key challenges for the future of ASEAN – and how to solve them

European Youth Vlog

EU-Japan trade agreement enters into force

We don’t need to ban plastic. We just need to start using it properly

Change is happening – and young people are leading the way forward

Neelie Kroes at the European Young Innovators Forum: Unconvention 2014

EU-US trade talks go ahead despite Prism and civil rights breach

EU Ambassadors in the EP: a multilateral approach to global challenges needed

Commission: Raising the social issues that can make or break the monetary union

Want a fairer society? This economist says he has the answer

EU decides “in absentia” of civil society

Oh, well, you are wrong, Google responds to the European Commission

Brexit talks: 2nd round fails to bring the EU and the UK closer on key issues

An ECB banker wants to change the European social model

Large parts of the world are growing more fragile. Here are 5 steps to reverse course

ECB steadily continues monetary easing policy as EU economy gains momentum

Can the next financial crisis be avoided?

Russia to cut gas supplies again: can the EU get back to growth without a solid energy market?

The new European Union of banks is ready

Ceasefire holds in Tripoli, but core problems remain, says UN Libya mission chief

Managers’ pay under fire

French election: Will France vote for a reformed or no EU?

Respect for fundamental rights and freedoms key for peaceful polls in DRC – UN mission chief

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