Landmark EU Parliament – ECB agreement on bank supervision

European Parliament, Economic and Monetary Affairs Committee (ECON) meeting: Towards a genuine economic and monetary union. MEP Marianne Thyssen in the foreground on the left, (European Parliament, Audiovisual Services)

European Parliament, Economic and Monetary Affairs Committee (ECON) meeting: Towards a genuine economic and monetary union. MEP Marianne Thyssen in the foreground on the left, (European Parliament, Audiovisual Services)

In a ground breaking development opening the way to the European Banking Union, the European Parliament and the European Central Bank undersigned the draft text of an Interinstitutional Agreement providing for the exact procedures related to the enactment of the Single Supervisory Mechanism. The legislative had reserves about the transparency and accountability of the SSM to be institutionalised under the authority of ECB.

At the beginning all Eurozone countries are obliged to participate in the EBU and the SSM. ECB will undertake directly the supervision of the 150 systemic banks of the euro area. Every other EU country is free to fully participate accepting of course the entire framework of the Mechanism. In this context the less important banks in all participating countries will continue to be supervised by the national central banks, which will be following standard supervisory practices to be drafted by the European Banking Authority. The ECB would be able to intervene supporting the national central banks in their role. Actually the ECB may at any moment decide to directly supervise one or more of these less important banks to ensure consistent application of high supervisory standards.

Presidents’ agreement

At this point it must be noted that the European Parliament had raised a number of issues over the creation of the SSM related to the democratic legitimisation and the accountability of ECB, in its role as a central supervisor of all euro area’s banks. Seemingly the agreement reached between the Parliament and the ECB yesterday adequately answers the reserves of legislators. To this effect the Presidents of the two institutions, Martin Schulz and Mario Draghi, signed a Declaration covering this uncharted area.

The relevant part of this common Declaration states that the “The draft Interinstitutional Agreement provides in particular for strong parliamentary oversight of the ECB’s supervisory tasks through regular exchanges of views with Parliament’s responsible committee, confidential oral discussions with the Bureau of that committee, and further access to information including to a record of proceedings of the Supervisory Board. ECB cooperation with the European Parliament in the framework of its investigations is also ensured”.

In this quote above there is however a key phrase providing only for “oral discussions with the Bureau”. Obviously this means there will be no minutes held and consequently the members of the Bureau of that Parliamentary Committee wouldn’t be able to refer to what was discussed with the ECB representatives, that is the SSM’s Supervisory Board. This practice comes under a more general conservative attitude of ECB, the Governing Council of which doesn’t release the minutes of its discussions despite strong pressures from the public opinion. Only recently Mario Draghi accepted that the ECB could release just a summary of the Governing Council’s discussion records.

Parliamentary control

However the legislative would have “access to information including to a record of proceedings of the Supervisory Board”. This Board will be the top body of the new and independent SSM department under the roof of ECB, which will undertake the task of supervising Eurozone’s banks. The Chair of the Supervisory Board will be required to appear at regular hearings before Parliament. In addition the Parliament will be involved in the selection procedure of the Chair of the Supervisory Board. On top of that, “ECB cooperation with the European Parliament in the framework of its investigations is also ensured”. Understandably the investigative part of SSM’s workings as supervisor of euro area banks is of crucial importance.

The results of those investigations will be the subject matter on which crucial decisions will be made. More so if the final assessment of ECB will be that the bank in question is ‘beyond limit of repair’. Of course from that point onwards it’s up to the resolution authorit(y)(ies) to decide and place the bank under a resolution process. Unfortunately there is still no agreement about this last stage. The thorny question is whether there will be one single central resolution authority for failing banks presumably under the European Commission with access to adequate funding, or the resolution task will be decentralised to national authorities without access to central funding and probably using varying criteria. Mind you the final decision for the resolution of a bank rests with the resolution authority. In this respect Germany obstinently disagrees with the centralised option.

Nearer to the EBU

In any case yesterday’s agreement between the Parliament and the  ECB is a major step towards the enactment of the European Banking Union. Everybody agrees that the creation of the EBU will mark the second more important step in Eurozone’s history, after the introduction of the common currency. Despite the fact that there was already a deal between the Parliament and the Council over the new system of bank supervision, the legislators and the ECB had to agree “how the ECB supervisor would be democratically accountable and transparent”.

Obviously those reserves by many MEPs are now satisfied. MEPs Marianne Thyssen (EPP, BE) and Sven Giegold (Greens/EFA, DE) steered the two legislative texts in Parliament. Both proposals were adopted with very large majorities.

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

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

Somalis ‘will not be deterred’ by Friday’s terror attacks – UN chief

The Catcher in the Rice

Heat stress spike predicted to cost global economy $2,400 billion a year

Brexit and migration dominates the debate on October’s EU summit

Plans to keep EU budget funding in 2020 in the event of a no-deal Brexit

EU car manufacturers worry about an FTA with Japan

Brexit: EP Group leaders support a flexible extension until 31/1/20

The Europeans with a job diminish dangerously

Turkey needs to step up investment in renewables to curb emissions

In Afghanistan, attacks against schools have tripled in one year

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

Independent UN rights experts call for ‘immediate investigation’ into alleged Bezos phone hack by Saudi Arabia

Parliament makes it easier to organise a European Citizens’ Initiative

Young activists do the talking as UN marks World Children’s Day

What makes America the world’s most competitive economy?

4 things President Trump could learn from Jimmy Carter

Climate emergency: City mayors are ‘world’s first responders’, says UN chief

North Sea fisheries: MEPs back EU plan to sustain stocks of demersal species

Six months into DR Congo’s deadliest Ebola outbreak, top UN official praises ‘brave’ response effort

Global Citizen-Volunteer Internships

Wednesday’s Daily brief: Day 3 of anti-hatred summit, UNFPA turns 50, Ben Stiller #WithRefugees, updates on Abyei

Mankind’s first tool to fight malaria also kills

UN relief chief urges Security Council to back aid delivery, more funding for millions of Syrians hit by harsh weather

Mali facing ‘alarming’ rise in rights violations, warns UN expert

The future of manufacturing is smart, secure and stable

When is Berlin telling the truth about the EU banking union?

Wednesday’s Daily Brief: Guterres in Kenya, Prisoners sick in Iran, #GlobalGoals, Myanmar, Ukraine updates, and new space partnership

Don’t let smoking steal life’s breathtaking moments, urges UN health agency

Millions of Bangladeshi children at risk from climate crisis, warns UNICEF

Somalia: UN urges steps to ensure future elections not ‘marred’ by rights abuses seen in recent polls

THE ROAD TO GANESHA

Why income inequality is bad for the climate

OECD strengthens co-operation with Morocco – Renews Morocco Country Programme Agreement

How quantum computing could beat climate change

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

Malaysia can show the way towards a holistic model for human rights

Eurozone: Retail sales and inflation point to recession

When it comes to envirotech adoption, NGOs can lead us out of the woods

Have we reached peak smartphone?

Africa: Urgent action needed to mobilise domestic resources as tax revenues plateau

Why do US presidential elections last so long? And 4 other things you need to know

We can save our ocean in three steps – if we act now

4 bold new ways New York is going clean and green

Denmark plans ‘Silicon Valley’ on 9 artificial islands off Copenhagen

Joint EU-U.S. statement following the EU-U.S. Justice and Home Affairs Ministerial Meeting

A win-win strategy for private equity deals

Humanitarian visas would reduce refugees’ death toll

5 libraries doing innovative things to help their communities

A Young student assesses the Programme for International Student Assessment (PISA)

UN condemns Syrian ‘war on children’ as up to 30 reportedly killed in clashes

Smart devices must come with trust already installed

Reusable packaging: 6 benefits beyond sustainability

Commission: Gifts of €6 billion and free trainees to ‘help’ poor employers

Air pollution could be responsible for 1 in 7 new cases of diabetes

Mergers: Commission opens in-depth investigation into PKN Orlen’s proposed acquisition of Lotos

Community Manager – 1289

Alarming level of reprisals against activists, human rights defenders, and victims – new UN report

How to turn Africa’s manufacturing sector into a high-tech powerhouse

5 lessons for the future success of virtual and augmented reality

What makes a great CEO? The people they surround themselves with

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