The financial future of Eurozone on the agenda of Friday’s ECOFIN council

Press conference by Michel Barnier, Member of the European Commission, on the establishment of a Single Resolution Mechanism for the Banking Union. (EC Audiovisual Services).

Press conference by Michel Barnier, Member of the European Commission, on the establishment of a Single Resolution Mechanism for the Banking Union. (EC Audiovisual Services).

 

The agenda of the Economic and Finance Ministers’ Council (ECOFIN) of 15 November in Brussels is very heavily loaded. The ‘Taxation of savings incomes’ and the ‘Revision of the Anti-Money Laundering Directive’ may be major issues, but the first reading of Commission’s proposal for the creation of the Single Resolution Mechanism (SRM) will haunt ECOFIN’S day and Eurozone’s future. In two days from now it will be clearer if the Union is to follow Germany’s way for a limping European Banking Union, or the Commission’s proposal supported wholeheartedly by the European Central Bank for a solid financial space at least in the euro area.

On top of that, the Commission is preparing a strong blow against Berlin, blaming this country for excessive trade and fiscal surpluses at the expense of the rest of the Eurozone. Germany’s external trade with the rest of Eurozone leaves a continuously growing huge surplus to the detriment of the rest of the EU with the Berlin government boasting about its competitive automotive and machine production industry.

The European Sting has been following this issue very closely. On 23 October Elias Lacon wrote that “On the political level, the European Commission and the IMF have been warning Germany for months now about its inextricable over stretched internal fiscal and revenue double consolidation. Now the Commission comes back with an excellent economic paper, which employs a structural multi-country model and assesses the negative impact of fiscal consolidation measures undertaken in 2011-13, in the euro area periphery and the core countries”.

Now the ECB has joined the club of the parties blaming Germany for not spending more and hoarding less. The Commission, the IMF and now the ECB insist that if Germany relaxed its fiscal and incomes austere policies the entire Eurozone may start breathing again. Instead of that, Berlin keeps absorbing whatever strength is left in the rest of Eurozone.

ECB opposes Berlin

The decisive step taken by the ECB last week, when the central bank reduced its interest rates and it further loosened its already relaxed monetary policy, despite the strong reaction of its two German members. Jens Weidmann, President of Deutsche Bundesbank and Jörg Asmussen, member of the Executive Board of the ECB, strongly resisted the reduction of central bank’s interest rates. It was not only that, though. Also last week, ECB’s legal service almost entirely endorsed the Commission’s proposal about the creation of the Single Resolution Mechanism and Fund, contrary to the Berlin opinion.

The Commission proposes the creation of a centrally operated SRM and Fund the soonest possible, while Berlin wants decentralised bank resolutions without the support of central financing. Germany also insists that the Commission’s proposal, in order to be soundly based, presupposes an amendment of the Lisbon Treaty. This last allegation was plainly rejected by ECB’s legal service.

A crucial ECOFIN

In view of the next ECOFIN meeting this Friday, the Commission issued today a Press release saying “the European Commission has proposed a Single Resolution Mechanism (SRM) for the Banking Union on 10 July 2013, which includes a single resolution board and a single resolution fund so we can tackle future bank crisis efficiently with minimal costs to taxpayers and the economy”. The Commission adds that the “The SRM will basically apply the substantive rules of the draft Bank Recovery and Resolution Directive in a coherent and centralised way ensuring consistent decisions for the resolution of banks”.

The EU’s executive arm tries, in this way, to pre-empt the reaction of the German Federal Minister of Finance Wolfgang Schäuble. In reality, this Press release tells Germany that a central resolution authority will do nothing more than enforce the already agreed upon draft Bank Recovery and Resolution Directive in a uniform and transparent way. Despite the fact that there is still no new government in Berlin, and the present one is simply an interim administration, it’s highly probable that Schäuble retains his position in the CDU-SPD grand coalition.

Even if he doesn’t, he will continue being a very influential figure in German politics, probably from a more senior government position. Given that, what is going to happen in the next ECOFIN Council on Friday will determine the shape of Eurozone’s financial future. Not to forget, that the European Banking Union is the most important step in EU’s history after the introduction of the single currency.

 

Advertising

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

The European Brain Drain: a truth or a myth?

EU Parliament: No EU-US trade agreement without safe data

Harnessing the power of nature in the fight against climate change

DR Congo: Restore internet services as ‘a matter of urgency’, urges UN expert

‘Score a goal’ for humanity, says Mohammed, celebrating winning link between sport and development

5 ways to fast-track the transition to a carbon neutral world

19th EU-China Summit: A historical advance in the Chino-European rapprochement

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

Nicaragua: MEPs condemn brutal repression and demand elections

Caravan of Mothers of Missing Migrants kick off a global migration search movement

Parliament cuts own spending to facilitate agreement on EU budget

What the world will look like after the Iran and 5+1 deal; the US emerges as major power broker in Middle East

UN, African Union make significant joint commitment to global health

At UN, Somalia’s President spotlights country’s progress, but cautions eradicating terrorism ‘will not be easy’

Will the French let Macron destroy their party political system?

EU Council: The US airlines may freely pollute the European air

The German banks first to profit from public subsidies of trillions

How digital remittances can help drive sustainable development

Why exchange programs are essential for the medical students of the 21st century

‘Catastrophic’ healthcare costs put mothers and newborns at risk

Thousands of Syrians in ‘life and death’ struggle amid harsh conditions in remote desert camp, UN warns

Yemen conflict: ‘Fragile’ hopes rise, as violence decreases and life-saving humanitarian funding surges

MEPs demand Bulgaria’s and Romania’s swift accession to Schengen area

Let Nagasaki remain ‘the last city’ to suffer nuclear devastation says museum director, as UN chief arrives

The Fourth Industrial Revolution needs a social revolution, too. Here’s how we can make this happen

Facebook-Cambridge Analytica: MEPs demand action to protect citizens’ privacy

Women’s empowerment ‘essential to global progress’ says Guterres, marking International Day

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

The financial sector cripples Eurozone growth prospects

UN chief pays tribute to Egypt’s role in avoiding ‘dramatic’ escalation in conflict across the Gaza-Israel border

Antitrust: Commission imposes interim measures on Broadcom in TV and modem chipset markets

Tobacco-free Public Space in Africa’s Most Populous Country

London wants new skyscrapers to protect cyclists from wind tunnels

The banks first to benefit from the new euro trillion ECB plans to print

‘Unconscionable’ to kill aid workers, civilians: UN Emergency Coordinator

The EU adopted €297 million in concrete actions for refugees and local communities in Jordan and Lebanon

Parmesan cheese on shelves in Italy (Copyright: European Union, 2014 / Source: EC - Audiovisual Service / Photo: Daniela Giusti)

CETA at risk again: Italy says it won’t ratify EU-Canada trade deal over product protection fears

What cryptocurrencies will do to the integrity of politics

From Kenya to China, here’s why countries should start working together on AI

How smart tech helps cities fight terrorism and crime

‘Three-country crisis’ across central Sahel puts whole generation at risk, warns UN food agency

Where will evolution take us in the Fourth Industrial Revolution?

How video games can reunite a divided world

Overseas investment falling, developing countries largely unscathed: UN trade agency

How to unleash the enormous power of global healthcare data

Superconductors: the miracle materials powering an energy revolution

How a more integrated approach could help to end energy poverty

World Summit Awards 2016: Sustainable impact through digital innovation

The end of the 404? Why we need to repair the internet’s crumbling infrastructure

ECB’s €1.14 trillion again unifies Eurozone; Germany approves sovereign debt risks to be pooled

UN launches ‘South-South Galaxy’ knowledge-sharing platform in Buenos Aires

250+ senior claims leaders under one roof, exchanging transformation strategy

Syrians ‘exposed to brutality every day’ as thousands continue fleeing ISIL’s last stand

Syrian Government’s ‘different understanding’ of UN role, a ‘very serious challenge’ – Special Envoy

Preserving biodiversity vital to reverse tide of climate change, UN stresses on International Day

Commission presents ways to further strengthen the euro’s global role

Switzerland to favour EU citizens in immigration quotas as the risk of a new referendum looms

The India–U.S. trade dispute and India’s evolving geopolitical role

TTIP wins Merkel’s endorsement ahead of 2016 tough deadline

Commission criticised member states on blocking financial transaction tax

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