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.

the sting Milestones

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

Catalysing change for gender equality, co-authored by two United Nations Under-Secretary Generals

Vaccination: understanding the challenges surrounding COVID-19 vaccination campaigns

How cities are failing to be inclusive – and what they can do about it

AI can wreak havoc if left unchecked by humans

The challenge to be a good healthcare professional

Total US cases quadruple in one week – Today’s coronavirus updates

How wealthy people transmit this advantage to their children and grand children

Amazon sinks while our breath sinks

Sudan Partnership Conference: EU mobilises more support for Sudan’s transition

Feeding families remains complex task in war-torn Syria – UN relief agency

Worldwide consumer confidence has shot up to its highest level for four years according to a survey of 130 Global Retail leaders

4 steps to using AI in an environmentally responsible way

Three experts on why eradicating plastic pollution will help achieve gender equality

What happens when you toss your water bottle in the trash?

Traditional finance is failing millennials. Here’s how investing needs to change

Falling inflation urges ECB to introduce growth measures today

Turkish and Greek Cypriot leaders ready for talks with UN chief on improved relations

Young people are not a nameless, faceless mass. So why do we treat them as such?

World Retail Congress Dubai 2016: Retail’s night of nights

More answers from Facebook ahead of Parliament hearing today

Competition: Commission invites stakeholders to provide comments on the application of EU competition law to collective bargaining agreements for self-employed

Hunger in Yemen: WFP considers aid suspension in face of repeated interference by some Houthi leaders

The silent code blue- a call for health worker’s safety

How do we upskill a billion people by 2025? Leadership and collaboration will be key

Portugal: €4.66 million in aid for 1,460 dismissed workers and jobless young

OECD household income up 0.7% in first quarter of 2018, outpacing GDP growth

Flying cars and driverless buses – the future of urban mobility has landed

Restoring prospect of peace in Middle East is ‘our shared responsibility’ UN envoy tells Security Council

‘Make healthy choices’ urges UN agency, to prevent and manage chronic diabetes

Why diversity needs your star power, as well as sponsors

Nordic companies prove doing good is good for the bottom line

Final turnout data for 2019 European elections announced

Why your next car is a bike

Islamophobia is driving more US Muslims to become politically engaged, suggests report

State aid: Commission approves €400 million of public support for very high-speed networks in Spain

Rule of law conditionality: MEPs strike a deal with Council

Governments should step up their efforts to give people skills to seize opportunities in a digital world

Gaza blockade causes ‘near ten-fold increase’ in food dependency, says UN agency

Abuse of authority provisions adopted by the Senate raise concerns over Brazil’s capacity to ensure independence of prosecutors and judges in fighting corruption

EU Elections: new rules to prevent breaches of data used to influence elections

Tackling Youth Unemployment

The EU can afford to invest trillions in support of employment

EU-U.S. Privacy Shield: Third review welcomes progress while identifying steps for improvement

10 technology trends to watch in the COVID-19 pandemic

Eurozone business activity again on upwards path

European Citizens’ Initiative: Commission decides to register 2 new initiatives

Afghanistan: UN condemns blasts that leave 8 dead at cricket stadium

The racial wealth gap in the US is affecting its citizens and its economy – this is how

On sidelines of UN climate summit, US President calls for protection of religious freedom

Better air pollution data is helping us all breathe easier. Here’s how

Criminals thrive on data abundance – here’s how we’ll catch them

Humanitarian visas would reduce refugees’ death toll

A European young student shares his thoughts on Quality Education

Future EU-UK Partnership: European Commission takes first step to launch negotiations with the United Kingdom

Our indispensable problem: the paradox of modern plastics

Consumers and businesses to save money thanks to new EU cross-border payments rules

Education critical to ensure future of forests, and reverse their destruction

This wristband tells you what food to buy based on your DNA

InvestEU Fund: boost for sustainable, innovative and social investment

Quality of Europe’s bathing waters remains high, latest annual assessment finds

More Stings?

Advertising

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