The strong version of the EU banking union gains momentum

José Manuel Barroso, President of the European participated in the Bureau of European Policy Advisers (BEPA) conference on "The blueprint for a deep and genuine EMU (Economic and Monetary Union): Debating the future economic, monetary, banking and political union". (EC Audiovisual Services).

José Manuel Barroso, President of the European participated in the Bureau of European Policy Advisers (BEPA) conference on “The blueprint for a deep and genuine EMU (Economic and Monetary Union): Debating the future economic, monetary, banking and political union”. (EC Audiovisual Services).

The creation of a real European Banking Union, built to serve all Eurozone member states on equal terms found yesterday a new strong supporter. Yves Mersch, a member of the Executive Board of the European Central Bank and former Governor of the Central Bank of Luxembourg speaking yesterday at the UniCredit Business Dialogue in Hamburg, supported clearly the creation of a strong and central bank resolution authority adequately financed by the European Stability Mechanism. In this way he joined the ranks of those who want a seamless financial market all over Eurozone serving all national markets on similar conditions.

Before elaborating on what Mersch said in Hamburg, readers should be informed that the EU is about to enact a Banking Union, first in Eurozone and then opening it to the other Union members states who want to join. This new institution will make sure that the presently fragmented and even locking out some countries EU financial market is there for everybody. Presently almost half of Eurozone’s member states are practically not served from the EU financial markets and Greek, Italian, Spanish, Portuguese and Irish SMEs, households and other borrowers in those countries have no access at all to credit. In the rare case that they find an opportunity to borrow, they are obliged to pay the triple interest rate cost for the same business risks than their counterparts in Germany and France.

Which banking union?

As things stand now Germany strongly opposes a full-scale European Banking Union, with a central bank resolution authority and support from the ESM. The reason is that this may at some point in the future create cost to German taxpayers. Bank resolutions may prove a costly affair and Berlin fears that a strong EBU may spread individual country risks to all member states and in this way mutualise obligations. Some weeks ago Germany managed to get the French support on that.

The European Sting writer Elias Lacon reported on 31 May that, “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… without central financial support from the European Stability Mechanism”.

After that however, the leadership of the European Central Bank with its President Mario Draghi and vice President Vítor Constâncio, along with the Brussels Commission strengthened their opposing stance, in favour of a strong central bank resolution authority with support from the ESM. The European Parliament seems also to back this common ECB-EU Commission position. In this war there are now two well-formed camps around this issue. Reportedly however Paris is not wholeheartedly backing any more the German position.

The Luxembourg connection

Now Mersch comes along and expresses full support for the common ECB-Commission position, for a full-scale EBU with a central resolution authority and ESM backing. He is very careful though about the use of taxpayers’ money in resolving failing banks and yesterday he observed, “On the other hand, the use of taxpayers’ money should be limited to exceptional cases…Public funds such as those of the European Stability Mechanism (ESM) should only be used temporarily in emergencies. Such temporary assistance should be covered by subsequent levies on banks, so that it ultimately has no fiscal policy impact”.

The Luxembourg banker however knowingly puts his weight on the strong version of the EBU while he said “The detailed design of the “single resolution mechanism” is still the subject of debate in Brussels and the Member States’ capital cities. Without prejudice to any decisions thereon, I would like to highlight …that a European resolution authority would ensure that decisions are taken in a timely and objective manner. A network of national authorities would fall short of what is necessary in this respect…A European resolution authority would be able to avoid unnecessary delays and overcome coordination-related constraints”.

It’s like Mersch is saying that he knows what is going on in Berlin, Paris and Brussels over this affair. Exactly because of that however he says that he doesn’t want to miss the opportunity to put on the balance his own weight, in favour of a strong EBU. Luxembourg may be a small country but its role in EU affairs is much bigger that its size. Jean-Claude Juncker, its Prime Minister for the last 18 years has acted in many respects as a catalyst in crucial moments for the Union. Now his compatriot Mersh in taking a clearly anti-German position on the EBU is basically saying that “Juncker is with me”. The banker couldn’t be alone in this.

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

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

The Banking Union may lead to a Germanic Europe

Youth policy in Europe not delivering for young people

IMF: Sorry Greece it was a mistake of 11% of your GDP

Why lay people don’t expect anything good from G20

Pesticides: MEPs propose blueprint to improve EU approval procedure

The Commission neglects the services sector and favours industry

South Asia can become an innovation hub. Here’s how

These 4 Nordic countries hold the secret to gender equality

China in My Suburbs

Earthquake: Monte Dei Paschi Di Siena

UK must make clear what it wants, MEPs say in Brexit debate

G7 summit: Trump Vs. G6 leaders on trade and climate change

Why a healthy planet and a healthy economy go hand-in-hand

Snowden is the “EU nomination” for this year’s Oscars

The challenge of maintaining interest in Primary Health Care in medical students

Cocaine and opium production worldwide hit ‘absolute record highs’ – major threat to public health says UN study

ECB readies itself for extraordinary monetary measures defying Germany

UK Labour Party leader Corbyn readies to change Brexit political backdrop

2019 EU Budget: Commission proposes a budget focused on continuity and delivery – for growth, solidarity, security

Online government services could change your life. But only if you have access to the internet

UN forum to bring ‘big space data’ benefits to disaster response in Africa

Use “blockchain” model to cut small firms’ costs and empower citizens, urge MEPs

Close to final agreement on the EU Banking Union

UN chief welcomes event reuniting families on the Korean Peninsula

EU-U.S. Trade Talks: European Commission presents draft negotiating mandates

Financial Transaction Tax: More money for future bank bailouts?

China, forever new adventures

MEPs agree on new rules to tax digital companies’ revenues

Ship Recycling is the Commission’s Titanic

Dreaming of China

Drought in Europe: Commission presents additional measures to support farmers

Young? You should work out the entrepreneurial heart before the mind

Quicker freezing and confiscation of criminal assets in the EU

Third Facebook-Cambridge Analytica hearing: data breach prevention and cures

Draghi’s 2018 compromise: enough money printing to revive inflation and check euro ascent

Why do medical students have to emigrate to become doctors in 2017?

Poverty data never tells the whole story

Spotlight Initiative – EU and UN fight against domestic violence in the Pacific region

Top UN political official updates Security Council on Iran nuclear deal

Stigmatized, shunned and shamed, International Widows’ Day draws attention to their unique needs

Our present and future tax payments usurped by banks

Commission caps charges on card and Internet payments and enforces competition

Greater support needed for refugees and migrants from Venezuela – UN

China’s cities are rapidly becoming more competitive. Here’s why

Fresh airstrikes kill dozens in conflict-ravaged Syria

EU Commission: The banks are not obliged to finance the real economy

Climate change is speeding up. Our response needs to be even faster

The West – the EU and the US – is writing off Turkey’s Erdogan

The New Year 2016 will not be benevolent to Europe

Everybody against Japan over yen’s devaluation

Syria: UN-backed watchdog says chemical weapon ‘likely used’ in February attack

Presentation of Juncker’s Investment Plan: Can 315 billion euros save the EU?

Brexit: the time has come for the UK to clarify its position

Here are 4 tips for governing by design in the Fourth Industrial Revolution

The Parliament paves the way for the creation of the European Banking Union

Top envoy to Yemen praises ‘flexibility’ of chief negotiators as new UN mission chief is named

Rising landmine blast toll in Afghanistan highlights long-term care needs of survivors

EU budget: Commission proposes most ambitious Research and Innovation programme yet

Capital Markets Union: Making it easier for insurers to invest in the real economy

Moves to create a Kosovo army have ‘deteriorated relations’ with Serbia: UN peacekeeping 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