Commission: New proposal for centrally managed bank resolution

Michel Barnier, Member of the EC in charge of Internal Market and Services, participated in the public hearing on financial supervision in the EU which was organised in Brussels. (EC Audiovisual Services, 24/5/2013).

Michel Barnier, Member of the EC in charge of Internal Market and Services, participated in the public hearing on financial supervision in the EU which was organised in Brussels. (EC Audiovisual Services, 24/5/2013).

The European Commission is about to honour once more its title as ‘Guardian of the Treaties’. This fundamental Commission’s mandate obliges the EU’s executive to always promote more rather than less Union. In this respect after the French President Francois Hollande and the German Chancellor Angela Merkel agreed in Paris last week, to support a loose banking union with a dispersed in 17 Eurozone capitals the bank resolution mechanism, the Commission is about to come up with a new proposal to undertake itself this role. In this way Brussels will safeguard the central and effective character of the resolution authority.

Around this key issue there are now two well-formed camps. On the one side Germany and its close followers back a loose banking union, now supported half-heartedly by France. On the other side of the fence are firmly placed the European Central Bank and the Commission. ECB says that a banking union without a central and strong bank resolution authority cannot act as catalyst in transmitting effectively its monetary policies for cheap borrowing to all the 17 member states. In view of this the ECB has opposed Berlin’s proposal for an ineffective and dangerously decentralised bank resolution mechanism.

The Commission

In this affair the European Commission is the most fervent supporter of a strong banking union with a central bank resolution mechanism. Michel Barnier, Member of the European Commission in charge of Internal Market and Services has been supporting this option from the very beginning. According to information carried by major news agencies, he is expected today to submit to the College of Commissioners a new proposal bestowing to the EU’s executive the task of resolving and recovering failing banks.

The Commission has proved its abilities in this field on the occasion of the recent incident of the resolution and recovery of two Cypriot banks. In a paper entitled, “A new Financial System for Europe”, Barnier has described in detail his proposal for a central Single Resolution Mechanism for failing banks. This proposal is termed as a pending one by Barnier, probably to be presented today in the College. The Commissioner states that “in addition to the regulatory and supervisory framework applicable in the whole EU, the shared responsibilities and cross-border links within the euro area require specific measures to sustain confidence in the single currency. In particular, a banking union is necessary to break the harmful connections between sovereign debt markets and banks”.

In its long-term planning of the Banking Union and safeguard the euro, the Commission states that the deeper finacial integration is compulsory and of existential importance for the euro area. It should be built on a single rule book of crisis prevention, management and resolution and deposits guarantees for all banks. Given this, it is more than certain that the Commission will not forfeit its long-term planning for an opportunistic agreement between France and Germany.

The Commission’s proposal on recovery and resolution tools for banks in crisis is a key pillar of the new financial regulatory framework that refers to all banks of the European Union. On top of that the practice to make taxpayers pay for the failing banks is self destructive and doesn’t offer a viable solution for the future of the euro area. In view of that the Commission wants to make sure that the taxpayer does not always end up bailing out banks. To avoid this Barnier proposes a common framework of rules and powers to deal with banks in difficulty to be set up by 2015 or earlier. Repeated bailouts of banks have increased public debt and imposed a very heavy burden on government budgets. The euro area cannot survive like that and the Commission is there to see that this is avoided.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

How to build a more resilient and inclusive global system

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

Amazon indigenous groups want to create a nature sanctuary the size of Mexico

UN’s Grandi slams ‘toxic language of politics’ aimed at refugees, migrants

New Syria fighting represents ‘giant powder keg’, warns aid veteran, as he leaves UN stage

Facebook wins EU approval for WhatsApp acquisition; just a sign of the times

Eurozone 2013: Where to?

“A Junior Enterprise is run only by students.. there are no professors or managers that can help you solve your problems”

The success story of a Chinese investment in the Greek port of Piraeus

These are the countries best prepared for the fight against cancer

Latin America’s cities are ready to take off. But their infrastructure is failing them

6th Edition of India m2m + iot Forum 2019 concluded, in association with The European Sting

Seven trends shaping the future of the mining and metals industry

The miserables and the untouchables of the economic crisis

These five exercise trends will help society and your health

Spending another 3 billion euros on Turkey feels better than admitting EU’s failure

European Commission and four online marketplaces sign a Product Safety Pledge to remove dangerous products

The great challenge of the 21st century is learning to consume less. This is how we can do it

‘Still time’ to stop a ‘bloody battle’ for Libya’s capital, insists Guterres

Four ways Europe can become a global innovation leader

Why Eurozone’s problems may end in a few months

Civil society organisations disenchanted with “Youth Guarantee”

International Day of the Midwife: 5 things you should know

Financial Transaction Tax: More money for future bank bailouts?

A Sting Exclusive: “Climate change and youth inaction: oblivion or nonchalance?”, AIESEC wonders from Brussels

4 bold new ways New York is going clean and green

UN recognises role of sport in achieving sustainable development

Finland, Switzerland and New Zealand lead the way at teaching skills for the future

Theresa May in search of a magic plan to invoke Article 50 and start Brexit negotiations now

Mind the (gender) gap: why we should stand together on inclusion

A Sting Exclusive: “China is Making Good Stories not Bad Ones”, Ambassador Yang highlights from Brussels

Merkel had it her way with the refugees & immigrants but can Greece and Turkey deliver?

India is failing 175 million of its young people. Here’s the solution

Mediterranean migrant drownings should spur greater action by European countries, urge UN agencies

Here are three key ways that data analytics can improve the workplace

Who is culpable in the EU for Ukraine’s defection to Russia?

‘Continue working together’ UN chief urges DR Congo, as country heads to polls

Can China deal with climate change without the U.S.?

How cities can lead the way in bridging the global housing gap

Is ECB helping Germany to buy cheaply the rest of Europe?

COP24: A million lives could be saved by 2050 through climate action, UN health agency reveals

UN chief welcomes Taliban’s temporary truce announcement, encourages all parties to embrace ‘Afghan-owned peace’

The 28 EU leaders care more about fiscal orthodoxy than effectively fighting youth unemployment

How Finland is fighting fake news – in the classroom

UN food agency appeals for access to key storage facility amid fight for Hudaydah

Why artificial intelligence is learning emotional intelligence

EU Directive makes haircut on uncovered deposits a standard in bank bail-ins

From Russia with love: Brussels and Moscow close to an agreement on Ukraine’s gas supplies

Seize the opportunities of digital technology to improve well-being but also address the risks

When will Eurozone’s unemployment rate stop being Europe’s worst nightmare?

FROM THE FIELD: Weather reports come to aid of Uganda’s farmers

The secret weapon in the fight for sustainability? The humble barcode

Terrorism diverts resources from ‘much-needed’ development to ‘costly’ security, warns UN envoy for Central Africa

Crime and drugs in West and Central Africa: Security Council highlights ‘new alarming trends’

MEPs call on EU countries to end precarious employment practices

MEPs cap prices of calls within EU and approve emergency alert system

Recession: the best argument for growth

There is a forgotten solution to climate change that we must invest in – nature

Tsipras imposes more austerity on insolvent Greece; plans to win new early election soon

Immigrant integration policies have improved but challenges remain

Satellites and data are going to help us phase out fossil fuels. Here’s how

What the Corn Laws tell us about Brexit Britain

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