The Parliament accuses core EU countries of exploiting their dominant political position

As promised, the plenary of European Parliament overwhelmingly approved yesterday a resolution by 483 votes to 27, and 65 abstentions, accusing with it some core EU countries and “to some extend the Commission” for holding back crucial legislation to promote the financial sector’s reform. The European legislators want the financial sector to serve the real economy and the job generating SMEs and also increase prudency so as the risk for a new financial crisis can be eliminated. The European Sting writer Elias Lacon wrote yesterday, that “The ‘inquisition’ of Commission and Council dignitaries will include questions by MEPs on the pending draft rules to protect small savers, which have been blocked by Council for well over a year. Legislators will also ask about the Commission’s sleeping proposal on trading platforms in securities, which was supposed to be presented in 2010”. Both those issues are blocked by EU heavyweight member states. Let’s take one thing at a time. Bank deposit guarantee Starting with the bank deposit guarantee the resolution adopted yesterday by the MEPs says that “certain EU countries apparently lack the determination to strike the agreements needed to put their public pledges to complete the banking union into effect”. In this respect the truth is that the enactment of an EU level or Eurozone level bank deposit guarantee in a Banking Union is not at all a simple matter. Of course there are already giant steps taken towards this direction. The first step has been agreed by all and was the nomination of the European Central Bank, as the new pan European bank supervision authority. It’s impossible for a bank deposit guarantee scheme to exist without a reliable supervision of all and every commercial bank. The ECB is in fact meticulously building a completely independent and brand new section under its own roof to undertake this difficult task. This is not enough however for the creation of an EU proper system of bank deposit guarantee, comprising also the existing national schemes and absorbing their capital. There is also a need for a real European Banking Union with standard bank resolution procedures, if this bank deposit guarantee plan is to be convincing. The European Commission, however, is very active in this front and presses hard for a central bank resolution authority and a common resolution fund. From the moment  those tools become operational the European Banking Union could be enacted and be functional as from the beginning of 2015. Then a pan-European system of bank deposit guarantees will be feasible. It is Germany though that blocks all that. To overcome the obstinacy of one country the Parliament recommends that, “Rather than decide by consensus, the Council should shoulder its political responsibility and vote its positions by a qualified majority”, the adopted text says. Trading platforms On trading platforms the picture is quite the same. In this case it’s not probably Germany that blocks the progress of this issue in the Council. The Parliament’s resolution says: “The same applies to reviewing rules for safer trading platforms (review of markets in financial instruments directive), which remains blocked in Council even though EU countries’ heads of state set a deadline for finalising it (end 2012), the resolution says”. On both accounts, that is bank deposit guarantees and trading platforms, the Parliament stresses that Council decisions could be taken by a majority. The fact that some core countries manage to hold back those decisions is tantamount to exploiting their dominant position. This is a direct political accusation, blaming some heavyweight member states for exerting more influence, than their voting rights in the Council. In short the Parliamentarians say that some core EU countries are exploiting to their benefit their dominant political position in the Union. The question is whether the Council has the sensitivity to hear the Peoples’ voice as expressed by the European Parliament.