Eurozone: Bank resolution proposal gains wider interest

Michel Barnier, Member of the European Commission in charge of Internal Market and Services, gave a press conference to present a proposal for a Single Resolution Mechanism (SRM) for the Banking Union. The mechanism would complement the Single Supervisory Mechanism (SSM) which, once operational in late 2014, will see the European Central Bank (ECB) directly supervise banks in the euro area and in other Member States which decide to join the Banking Union. The Single Resolution Mechanism would ensure that – not withstanding stronger supervision - if a bank subject to the SSM faced serious difficulties, its resolution could be managed efficiently by the European Commission with minimal costs to taxpayers and the real economy. (EC Audiovisual Services, 10/7/2013).

Michel Barnier, Member of the European Commission in charge of Internal Market and Services, gave a press conference to present a proposal for a Single Resolution Mechanism (SRM) for the Banking Union. The mechanism would complement the Single Supervisory Mechanism (SSM) which, once operational in late 2014, will see the European Central Bank (ECB) directly supervise banks in the euro area and in other Member States which decide to join the Banking Union. The Single Resolution Mechanism would ensure that – not withstanding stronger supervision – if a bank subject to the SSM faced serious difficulties, its resolution could be managed efficiently by the European Commission with minimal costs to taxpayers and the real economy. (EC Audiovisual Services, 10/7/2013).

It will be increasingly difficult for Germany to repel the creation of a strong and centrally controlled Single Resolution Mechanism for failing banks, the other pillar of the European Banking Union. Yesterday Vítor Constâncio, Vice-President of the European Central Bank expressed his full and unconditional support for the relevant Commission’s proposal. Understandably the first pillar is the Single Supervisory Mechanism (SSM), a task bestowed to the ECB. To be reminded that last Wednesday the European Commission announced a proposal for a Single Resolution Mechanism based on the concept of an agency with wide autonomy and ultimately dependent on the Commission for the crucial decision of putting a bank into resolution. The German minister of Finance Wolfgang Schauble rushed to comment that the Commission’s proposal “has feet of clay”.

Constâncio was speaking at an Expert Seminar entitled “Asia’s role in the Global Economy Forum”, organised by Official Monetary and Financial Institutions Forum (OMFIF), on Friday 12 July. When touching the EU’s executive arm announcement for the SRM he said that he was addressing the matter “from a personal point of view”. However ECB’s Vice President is not alone in supporting a strong and central SRM. Mario Draghi also has expressed a similar position albeit in a more elusive way. The same is true for more members of the European Central Bank’s Governing Council.

A Nazi law?

The controversy however over the nature and the function of the SRM is taking every day new dimensions. The head of the Bavaria bankers association (GVB) Stephan Götzl, compared yesterday the Commission’s proposal with a Nazi law allowing the Nazi regime to take over a bank. Reacting to this statement the Commission issued a memo saying, “that the European Commission has certainly no intention of responding to such an inappropriate analogy or of taking part in a polemic of this nature. It would recall objectively that the aim of its proposal is to protect the European taxpayer in case of bank failure. It respects the Treaty, the sovereignty and prerogatives of each Member State. The Council of Ministers and the European Parliament are now going to debate the text as is their role”.

With this brief announcement the Commission is not actually replying to the Bavarian banker. The core of the memo is directed to the German government, telling them that they cannot avoid facing this discussion because it will be on the agenda of the two legislative institutions of the European Union that is the Council and the Parliament. What the Bavarian banker said however may trigger wider media coverage and once such delicate issues appear on eight o’clock news, everything becomes surreal. Incidentally this issue if it reaches the main political platform in Germany it may harness Angela Merkel’s prospects in the 22 September legislative election.

Who decides what?

The idea is that the power to be vested upon the Commission to make the final decision which bank will be resolved in all the 17 member states of the Eurozone, if painted with chauvinist colours and served in a distorting way it may sound quite appalling to the average German voter. Such a prospect could create grave political and tactical problems for the governing Christian Democrats in Germany.

As for the question if the creation of a strong and centrally control bank resolution mechanism is compatible with the EU Treaties, Constâncio said that “it is still too early to provide an in-depth assessment of the Commission proposal and a more detailed assessment will be published in our ECB legal opinion”. There is no doubt that the creation of an effective Single Resolution Mechanism will constitute a landmark in the history of the European Union. It will signal the creation of a seamless financial space all over the Eurozone.

 

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

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

Young people meet in Malta to shape the future of Europe

As human caravan moves through Mexico, ‘full respect’ needed for national control of borders: UN chief

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

World Cancer Day: Early cervical cancer diagnosis could save lives of over 300,000 women

UN launches plan to promote peace, inclusive growth in Africa’s Sahel

UN chief calls for ‘increased commitment’ to resolution on 10th anniversary of Georgia conflict

Eurozone at risk of home-made deflation and recession

UN refugee agency ‘deeply shocked’ at stabbing death of ‘deeply courageous’ Polish mayor

Health Education, is it a necessity?

The Brussels bureaucracy blocks the Youth Guarantee scheme

A Sting Exclusive: “Leading by example! EU must push for UN deal to avoid dangerous climate change”, European Parliament Vice-President Ulrike Lunacek cries out from Brussels

10th ASEM in Milan and the importance of being one: EU’s big challenge on the way to China

How close is the new financial Armageddon? IMF gives some hints

The big five EU telecom operators in dire straights

The Brexit factor in the US-China trade war and other conflicts

Two States ‘side-by-side’ is the ‘peaceful and just solution’ for Israel-Palestine conflict: Guterres

Fresh airstrikes kill dozens in conflict-ravaged Syria

UN and partners appeal for $920 million to meet ‘dire needs’ of Rohingya refugees

Medical Education is #NotATarget

EU Ambassadors in the EP: a multilateral approach to global challenges needed

EU budget: Making the EU fit for its role as strong global actor

The movement of anti-vaccers: taking humanity back 200 years

EU Parliament: Deposit guarantee and trading platform transparency sought

Main results of Environment Council of 09 October 2018

10 cities are predicted to gain megacity status by 2030

Why Italy will not follow the Greek road; Eurozone to change or unravel

Black Panther’s ‘General Okoye’ joins the fight against gender-based violence

MEPs call on EU countries to end precarious employment practices

The battle for the 2016 EU Budget to shake the Union; Commission and Parliament vs. Germany

‘Leaders who sanction hate speech’ encourage citizens to do likewise, UN communications chief tells Holocaust remembrance event

This project in India helps people and tigers co-exist peacefully

ILO’s Bureau for Employers´Activities to publish new study on women in business and management

It’s not summer holidays what lead to the bad August of the German economy

Investing in rural women and girls, ‘essential’ for everyone’s future: UN chief

COP21 Breaking News_03 December: Europe’s children urge leaders to commit to climate action at UN Climate Summit in Paris

European Commissioner for Youth wants young people to be at heart of policy making

The global economy isn’t working for women. Here’s what world leaders must do

Eurozone: Inflation plunge to 0.4% in July may trigger cataclysmic developments

How the United States can win back its manufacturing mojo

EYE to kick off on Friday: 8000+ young people discussing the future of Europe 1 – 2 June

India’s economy is growing fast, but its poorest areas lag behind. Here’s why this could be about to change

EU Copyright Directive: Google News threatens to leave Europe while media startups increasingly worry

Ecofin: ‘The Friday battle’ for the banking union

How fungi could save the world

UN relief official in Yemen condemns ‘horrific’ attack on passenger buses

Nigeria: UN chief ‘appalled’ by killing of aid worker; calls for release of remaining hostages

Germany openly seeks more advantages for its banks

A young student discusses the determinants of migration in the European Union

Erdogan vies to become Middle East Sultan over Khashoggi’s killing

Robots aren’t stealing all our jobs, says the World Bank’s chief economist

EU Budget 2019 deal: EP boosts support for researchers and the young

European Commission recommends to the European Council (Article 50) to find that decisive progress has been made in Brexit negotiations

European Semester Autumn Package: Bolstering inclusive and sustainable growth

Google prepares to final EU judgement over Android antitrust case

800,000 people commit suicide every year: WHO

A day in the life of a Rohingya refugee

‘Well-being of two million’ in Gaza at stake as emergency fuel runs dry: UN humanitarian coordinator

Eurozone slowly but surely builds its Banking Union

The economic cost of anti-vaccination movements in Italy

MWC 2016 LIVE: Mobile World Congress shows off planes, trams and automobiles

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