2014 will bring more European Union for the big guys and less for the weak

After the European Parliament plenary vote on the principles of winding down failing banks, the parliamentary Committee on Economic and Monetary Affairs will vote on the mechanism and fund. (EP Audiovisual Services 17-12-2013).

After the European Parliament plenary vote on the principles of winding down failing banks, the parliamentary Committee on Economic and Monetary Affairs will vote on the mechanism and fund. (EP Audiovisual Services 17-12-2013).

During 2014 Europeans will be confronted with at least two major developments. Firstly, the completion of the political control of the EU financial market will materialize during the next year, after the adoption, before March 2014, of the Resolution Board a body like the EU council, which will decide which banks will fail. A second surprise for all Europeans will be that the European Parliament will become more radical following the predictably awkward political results of the European Elections. Let’s take one thing at a time.

This politically controlled Resolution Board will ‘evaluate’ the supervisor’s (European Central Bank) proposal for the resolution of a bank, and it will also decide the details for its execution. Despite the strong reaction by the European Parliament President, Martin Schulz, against this ‘untransparent’ body, the truth is that the Economic and monetary affairs (ECON) Committee of the legislative has already accepted its existence and role in a 17 December meeting.

The Resolution Board

On that day the ECON Committee voted that, “The supervisor would be the sole body empowered to propose initiating a resolution. The Resolution Board, composed of national resolution authority representatives and others, would then evaluate this proposal and suggest that the Commission initiate such action. The Commission would then take the official decision to initiate a resolution and the Board would decide on the details for its execution”.

It’s more than certain that the European Banking Union, with the Resolution Board at its center, will be completed before the May 2014 European elections. All the relevant Regulations will be adopted under the tripartite decision-making procedure involving the Commission, the Council and the present Parliament as provided by the European Treaty. Predictably, the next Parliament may be much less receptive to accept the creation of a European Banking Union, where the resolution of failing banks will be decided by a political body resembling the European Council. In view of that, the entire legislative package to complete the Banking Union should be in place during the first months of the New Year.

Germany plus France against the Parliament

No question that Germany, seconded by France, will be able to guide the decisions of a body like the Resolution Board. This and some other ‘fishy’ reasons have prompted Iceland to abandon the idea of joining the EU. After May 2014 many more MEPs will be of the opinion that the Icelanders are quite right to think like that. This possible development brings about the second issue raised at the introduction of this article; the composition of the next Parliament.

The European Sting on various occasions has predicted that the next EU Parliament will be filled with many more extremists, Eurosceptics and harlequins. Understandably, the electoral results in the south of Eurozone will be devastating for the sitting governments. Greece, Italy, Spain and Portugal are expected to elect to Brussels and Strasbourg very different groups of legislators than their current ones. Even France, with Marine Le Pen’s party leading in polls, will elect many Eurosceptic MEPs, compared with almost none today. As for the north EU countries, there also, the nationalistic rhetoric is very strong and even the Finnish national Parliament has grave problems on that account.

Who guarantees what?

Last but not least, the bank deposits guarantee schemes agreed on 18 December between the European Parliament and the Council is a clear and early sign of what kind of Banking Union the Eurozone is about to create. According to a Press release issued by the Parliament, “Savings deposits under €100,000 will finally be guaranteed by funds contributed by banks, rather than the taxpayer, thanks to a political agreement struck by Parliament and Council negotiators on Tuesday. This agreement, three years in the making, will govern deposit guarantee schemes to be set up in each member state”.

These few lines contain a lie and a truth. The lie is that the “deposit guarantee schemes to be set up in each member state” are already there. As things stand now, all Eurozone member states from Greece to Finland and from Ireland to Cyprus euro area countries operate a deposit guarantee scheme. However, it’s very questionable if those schemes can cover all bank deposits of less than €100,000 for each client in case of a crisis. Given that, what the Parliament and the Council decided was to continue building those schemes but not to mutualise the eventual obligations of those national guarantee schemes.

In short, it is still “everyone for himself” in the European Banking Union as far as the deposit guarantee is concerned. Germany and France didn’t want to share the possible obligations of, say, the Italian bank deposit guarantee scheme, in case of crisis. It will be exactly like that also in the case of the bank resolution mechanism. Every euro area member state will continue, for at least the next four to five years, to be responsible for the cost of winding down a bank. Only after the sixth or the seventh year after the initiation of the bank resolution mechanism in 2016 the national systems will start to merge, truly mutualising the cost of winding down a bank. This is true for both the deposit guarantee schemes and the bank resolution mechanism(s). But by then Germany and France would be able to resolve as many banks as they want in certain smaller member states without having to pay a dime for that.

All in all, the New Year 2014 will prove that the European Union is not only hesitant to create a common future for all, but this time the big guys might be tempted to destroy the banking systems of the weak, with no cost at all to Germany or France. This is what the next EU Parliament would have never accepted.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

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

UN agencies call for more resettlement and end to detention of asylum seekers in Libya

6th Edition of India m2m + iot Forum to open its door on 14th January, in association with The European Sting

Top UN political official updates Security Council on Iran nuclear deal

Mozambique cyclones a ‘wake-up call’ to boost resistance: UN weather agency

MEPs and European Youth Forum call on EU to Invest in Youth

Ebola Outbreak in Democratic Republic Congo is ‘largely contained’: WHO

Security Council urges countries to factor child protection into conflict prevention efforts

“Asia-Pacific takes stock of ambitious development targets”, written by the Heads of UNFPA and ESCAP

‘We are nowhere closer’ to Israeli-Palestinian peace deal, than a year ago, Security Council hears

How populist and xenophobic movements in the EU tear apart European businesses and startups

Eurozone stuck in a high risk deflation area; Draghi expects further price plunge

A third of world’s out-of-school youth live in conflict, disaster-affected countries: UNICEF report

CHALLENGING THE ZEITGEIST OF DIGITAL – Change making projects innovate mobile support for refugees, inclusive environments, early breast cancer detection and more

From glass ceiling to glass cliff: women are not a leadership quick-fix

Wednesday’s Daily Brief: mental health, conflict prevention, Ebola in Uganda, Sudan protests, child labour

Hundreds of wounded Gaza protesters risk limb amputation without immediate help, warns top UN official

New York high school students are getting free water bottles to cut plastic waste

Gender disparity in salary and promotion in medicine: still a long way to go

New Report Offers Global Outlook on Efforts to Beat Plastic Pollution

Winter 2019 Economic Forecast: growth moderates amid global uncertainties

MEPs urge the EU to lead the way to net-zero emissions by 2050

This new way of understanding disease is changing medicine

JADE Handover Ceremony at the European Parliement

Service Engineer Intern – 1991

Berlin wants to break South’s politico-economic standing

Sudan: UN chief deplores excessive force used against pro-democracy protesters, calls on military and civilian leaders to ‘stay the course’ in negotiations

Press conference by EC Vice-Presidents Valdis Dombrovskis (left) and Jyrki Katainen, on the Commission's proposals in the framework of the financial union (Source: EC Audiovisual Services / Copyright: EU, 2018 / Photo by Georges Boulougouris)

EU Finance ministers agree on new banking capital rules and move closer to Banking Union

‘The clock is ticking’ on meeting the Sustainable Development Goals, says UN deputy chief

UN chief urges Somalis not to be ‘deterred’ by latest deadly terror attack

Better ID card security to curb document fraud

Four lessons from Africa on building effective business ecosystems

The importance of exchanges for the medical students of the world

Q and A on the draft digital copyright directive

The European Parliament wants to stay in one place

The Brussels bureaucracy blocks the Youth Guarantee scheme

An expert in the South China Sea issue on an exclusive interview at the European Sting

How smartphones can close the global skills gap for billions

Here are 4 ways investors can influence more secure and responsible innovation

Our children’s career aspirations have nothing in common with the jobs of the future

Populist Eurosceptics helped by Trumpists seriously threaten the EU edifice

EP President praises Nobel Peace Prize award to Denis Mukwege and Nadia Murad

These are the world’s 20 most dynamic cities

Reflections on the the biggest refugee crisis since World War II

Companies have a new skill to master – innovation

Terrorist content online should be removed within one hour, says EP

More needs to be done to bridge the digital gender divide

Trump rejects Europe’s offer for zero car tariffs; he had personally tabled that idea in July

Khashoggi murder trials must public and meet international standards, UN expert urges

Medschool 4.0: how to succeed in the smart revolution of healthcare

EU sets ambitious targets for the Warsaw climate conference

Antibiotics are contaminating the world’s rivers

FROM THE FIELD: Liberia boosts efforts to guard against rising seas

Amsterdam is getting a 3D-printed bridge

EU Parliament: ECB accountable for not supporting real economy

FROM THE FIELD: Stopping aquatic hitchhikers to safeguard environments at sea

A skills gap is jeopardizing efforts to end energy poverty

Migration crisis, a human crisis after all

Parallel downfalls of Merkel and Deutsche Bank threaten Germany and Europe

5G mobile is nearly here – but we should share networks to make it affordable

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