Paris agreed with Berlin over a loose and ineffective banking union

Angela Merkel, German Federal Chancellor (on the left) and Francois Hollande, President of France in the European Council, meeting of 22 May. (EC Audiovisual Services, 22/5/2013)

Angela Merkel, German Federal Chancellor (on the left) and Francois Hollande, President of France in the European Council, meeting of 22 May. (EC Audiovisual Services, 22/5/2013)

Safeguarding the basics of the Franco-German unity, which functions as the powerhouse of the European Union, had another victim. The French President Francois Hollande and the German Chancellor Angela Merkel agreed yesterday in Paris to undermine the effectiveness of the European Banking Union. Instead of a strong central and financially independent bank resolution authority in the context of the EBU, they said they support a loose cooperation in bank resolutions, where national authorities would be responsible for the work on the spot, without central financial support from the European Stability Mechanism (ESM).

Actually this was not a compromise but rather a full acceptance of the German position by France. In reality however Paris had never fully supported the European Central Bank’s proposal for a strong central bank resolution authority, in the heart of an effective European Banking Union. Francois Hollande though had joined Enrico Letta, when the Italian Prime Minister asked for a real and strong banking union. Such an option could help create a seamless financial market all over Eurozone, securing for all SMEs the same credit opportunities for  similar business dangers, eliminating the largest part of the country risk.

France ‘sold’ the South

Of course France belongs to the core of the European financial markets and its own SMEs are favoured by the cheap ECB liquidity as their German counterparts. It’s the Italian, Greek, Spanish, Portuguese and other SMEs which are almost completely cut off from banking credit and when there is for them a borrowing option, the interest cost is at least triple than in core Eurozone countries for the same business risks. In short France ‘sold’ the south of Europe in order to safeguard the Berlin-Paris axis.

The pretext for this change of the French attitude was that the enactment of a strong Banking Union and a central bank resolution authority with access to European Stability Mechanism backing needed an amendment of the European Treaties. However this is exactly what the German minister of Finance Wolfgang Schaeuble supported in an article published on 13 May in the prestigious newspaper Financial Times. In this article he wrote, “The European Commission will soon put forward a proposal for a resolution mechanism. We will assess it with an open mind. Yet while today’s EU treaties provide adequate foundation for the new supervisor and for a single resolution mechanism, they do not suffice to anchor beyond doubt a new and strong central resolution authority”.

A loose banking union

In short France adopted almost entirely the German position, that in order to create an effective bank resolution mechanism within a Banking Union, there should be first an amendment of the European Treaties. This position would delay for years the accomplishment of this project.

On 28 May the European Sting writer Maria Milouv wrote, “Michel Barnier the European Commissioner responsible for the Internal Market and Services in a clear-cut way broke yesterday Commission’s silence and joined the European Central Bank’s approach, over the creation of an effective European Banking Union, able to guarantee that failing or about to fail banks will be duly resolved or managed by one central and powerful European Resolution Authority…In this way he gave a clear indication of the model the Commission envisages and he stressed that the authority, “will do more than just coordinate work between national authorities”. He then added, “We have seen the limits of coordination.”

Michel Barnier, the French EU Commissioner was supposed, until yesterday, to also represent authentically Paris’s positions in the dealings of the European Commission. Unfortunately, President Hollande reversed this, and let his country’s Commissioner in the air. Now the Commission and the ECB would have to confront the Berlin-Paris axis in their quest for a banking union for all.

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 are six bold ideas to accelerate sustainable energy innovation

UK keeps its Brexit plan secret or there is no strategy at all whatsoever?

On World Day to Combat Desertification, UN shines spotlight on ‘true value’ of land

Eating less beef and more beans would cut deaths by 5-7%

The EU Commission implicates major banks in cartel cases, threatens with devastating fines

Agreement reached on digital copyright rules

5 ways for business leaders to win in the 2020s

‘Complacency’ a factor in stagnating global vaccination rates, warn UN health chiefs

Sustainability is now mission critical for businesses. Here’s why

The US is withdrawing from a 144-year-old treaty. Here’s the context

Parliament seals ban on throwaway plastics by 2021

UN chief ‘deeply alarmed’ over military offensive in south-west Syria

EU Parliament: Follow the fraudulent money and confiscate it

COP21 Breaking News_05 December: Carbon Price Needed for Climate Change Success

5 amazing schools that will make you wish you were young again

Climate change and health: an everyday solution

Golden Pen of Freedom Awarded to Murdered Saudi Journalist Jamal Khashoggi during World News Media Congress 2019

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

Europe had a record year for Measles – and it’s partly down to anti-vaccine campaigners

EU Budget 2019 to focus on young people

No hard drivers in sight to remodel the stagnating affairs of the EU

Veteran UN Syria Envoy to step down, pledges to work ‘until the last hour’ for peace

Is the West gradually losing Africa?

Sweden has invented a word to encourage people not to fly. And it’s working

France is about to start giving free breakfasts to disadvantaged schoolchildren

China is the first non-EU country to invest in Europe’s €315 billion Plan

Statistics show the ugly face of youth training schemes

We had the hottest June ever this year – this is what happened around the world

Do the giant banks ‘tell’ Britain to choose a good soft Brexit and ‘remain’ or else…?

UN food agency begins ‘last resort’ partial withdrawal of aid to opposition-held Yemeni capital

As monsoon rains pound Rohingya refugee camps, UN food relief agency steps up aid

Internet of Things: a Force for Good or Evil?

Strengthening the rule of law through increased awareness, an annual monitoring cycle and more effective enforcement

A Sting Exclusive: “Infrastructure can lay the groundwork for the Sustainable Development Goals” by Mr Fulai Sheng, UN Environment Senior Economist

China is sending science students to live with rural farmers – and crop yields are skyrocketing

Forget about growth without a level playing field for all SMEs

Here are 10 of Nelson Mandela’s most inspirational quotes

Fake news: What it is, and how to spot it

Finland should do more to improve job prospects of low-skilled youth

2014 budget: The EU may prove unable to agree on own resources

Opening Remarks by H.E. Ambassador Yang Yanyi, Head of the Chinese Mission to the EU at the Chinese Fashion Night

WEF Davos 2016 LIVE: “European unity and cooperation is being called on question”, Vice President Joe Biden criticizes from Davos

Thursday’s Daily Brief: dire living conditions in Idlib, migrants at US southern border, end in sight for trachoma, Human Rights Council

Why South Africa is on a path of economic renewal

Can a Bavarian Oktoberfest beer indulger bring down the Berlin government?

Armenia should take vigorous measures against entrenched corruption

Why CEOs need to become activists in sustainability

Preserving biodiversity vital to reverse tide of climate change, UN stresses on International Day

Chernobyl nuclear disaster-affected areas spring to life, 33 years on

The Dead Sea is drying up, and these two countries have a plan to save it

European Youth Forum @ European Business Summit 2014: European Youth Unemployment

Who is to pay for Trump’s trade war against China?

Is it too soon to hope for a tobacco free Romania?

‘Virtual Biopsy’ device detects skin tumours in 15 minutes

The Schengen area is at a crossroads

The Commission neglects the services sector and favours industry

Yesterday’s “jokes” and sarcasm by Digital Single Market’s Vice President Ansip on EU member states’ right to protect their telco markets

Draghi sees inflationary bubbles

MWC 2016 LIVE: Mobile Connect availability hits 2B

Is Europe misjudging its abilities to endure more austerity and unemployment?

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