The Parliament defies a politically biased Banking Union

European Parliament. Economic and Monetary Affairs Comittee (ECON) meeting. Vote on the bank single resolution mechanism and fund. In the forefront Baldini Marino (S&D, HR), Fereira Elisa (S&D, PT) and Gauzes Jean-Paul (EPP, FR) vote by a show of hands. (EP Audiovisual Services, 17/12/2013).

European Parliament. Economic and Monetary Affairs Committee (ECON) meeting. Vote on the bank single resolution mechanism and fund. In the forefront (from left to right) Baldini Marino (S&D, HR), Fereira Elisa (S&D, PT) and Gauzes Jean-Paul (EPP, FR) vote by a show of hands. (EP Audiovisual Services, 17/12/2013).

The European Parliament prepares for the fight which is about to begin with the Council, over the negotiations on the creation of the Single Resolution Mechanism and Fund to deal with failing banks. This will be the last step towards the completion of the European Banking Union, the major EU project after the introduction of the euro. On Thursday morning there was supposed to take place a meeting, marking the start of negotiations between the European Parliament and the Greek Presidency representing the Council. The target is to agree on the text of the Regulation enacting the single resolution mechanism (SRM) and Fund at first reading in the European Parliament before the end of the current legislature in May 2014.

The subject matter of Thursday’s meeting was to discuss a text drafted by the euro-area member states in the ECOFIN Council on 18 December, committing them to negotiate, by 1 March 2014, an intergovernmental agreement on the functioning of the Single Resolution Fund. This SRF is expected to cover the additional costs of bank resolutions, after the funds of the shareholders and the unsecured creditors and depositors have been used and exhausted.

The unwanted intergovernmental meeting

Unfortunately no relevant Press release was published by the Greek Presidency or the Council after this first intergovernmental meeting, expected to have dealt with the details of the SRF. However, ahead of Thursday’s meeting the Parliament issued a tough Statement signed by the Chair of the economic and monetary affairs committee, the designated Rapporteur and the shadow rapporteurs. Understandably, the Parliamentarians wanted to make their opinion known ahead of the meeting for which the Presidency and the Council kept silence.

The Parliament’s Press release was very informative. It contained the following paragraph: “The negotiating team of the European Parliament is united behind the strong mandate it received from the economic and monetary affairs committee. This mandate does not provide for any need for an intergovernmental agreement to formulate the details on the functioning of the single resolution fund to be used in bank resolution”.

This statement is signed by Sharon Bowles (ALDE, UK), Chair of the economic and monetary affairs committee of the Parliament, Elisa Ferreira (S&D, PT), house rapporteur, Corien Wortmann-Kool (EPP, NL), Sylvie Goulard (ALDE, FR) and Sven Giegold (Greens/EFA, DE). Obviously all of them do not seem willing to negotiate the establishment of an intergovernmental conference, which predictably will decide all the details of the functioning of the SRF, in the absence of parliamentarians.

What Germany wants

Let’s recall what the ECOFIN Council decided on 18 December, understandably under the pressure of Germany. The relevant passage goes like this, “The Council agreed a general approach on a proposed single resolution board and a single fund for the resolution of banks. The compromise consists of a draft regulation on the single resolution mechanism (SRM), and a decision by euro-area member states committing them to negotiate, by March 2014, an intergovernmental agreement on the functioning of the single resolution fund. Negotiations with the European Parliament will now start, with the aim of agreeing the regulation on the SRM at first reading before the end of the Parliament’s current legislature (May 2014). Ministers also adopted a statement on the design of a backstop for the single resolution fund”.

In this way the ECOFIN Council has decided almost all the details of the bank resolution mechanism, including the functioning of the Board and the Fund. As the European Sting has explained on many occasions during the past few weeks, the Board will be politically controlled, simply because it will be composed by representatives of member state governments. Consequently its decisions, determining if a bank would be resolved or rather saved will be politically influenced.

As far as the cost of a bank resolution is concerned, it will continue to weigh the member state in which the failing lender is registered. This arrangement will last for at least four to five years, until the national Resolution Funds start to merge sometime around the year 2020. In short, over the next few years the Banking Union will be only a union in name, because the motto ‘everybody for himself’ will continue to prevail.

The Parliament disagrees

Now the Council expects the European Parliament to endorse, without major changes, this brand new institution and procedure as a ‘fait accompli’. That’s why the Parliament negotiators from the beginning contested  the need for a politically controlled intergovernmental agreement, authorised to decide on everything. In view of that, the five parliamentarians also stressed that, “We re-state our crucial requests that all banks must be treated equally, irrespective of which country they are established in, and that the system must be credible and efficient”.

No wonder if the negotiations between the Parliament, the Presidency and the Council exhaust or even break all deadlines. The legislators will certainly question the time-table set by the Council, planning to conclude the intergovernmental agreement by March and the whole affair by May. However, the Parliament is expected to contribute positively towards the conclusion of the Banking Union legislation within this legislature.

the sting Milestones

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

Challenges facing the COVID-19 vaccination campaigns

Civilian deaths in Afghanistan hit record high – UN

Visiting North Korea, UN relief chief spotlights funding shortfall to meet humanitarian needs

Meet Alice, the battery-powered plane that could herald the age of electric air travel

Britain in and out of the EU

Statement by the Brexit Steering Group on UK government White paper

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

Ebola: EU releases additional €3.5 million to tackle epidemic

Voices of young climate action activists ‘give me hope’ says UN chief

European Semester 2019 Spring Package: Commission issues recommendations for Member States to advance sustainable and inclusive economic growth

Easing ‘classroom crisis’ in Côte d’Ivoire, brick by (plastic) brick

The United Kingdom’s decision to leave the European Union will impact young people’s future the most

5 ways COVID-19 has changed workforce management

Parliament to ask for the suspension of EU-US deal on bank data

Coronavirus Global Response: European Commission pledges €300 million to Gavi

Trump’s MAGA policy remains unchanged as EU warns to impose additional retaliation tariffs on US products

European Defence Fund on track with €525 million for Eurodrone and other joint research and industrial projects

COVID-19 creates a perfect storm for the extreme weather season

Healthcare for refugees: a necessary symbiosis of medicine and politics

EU climate law: MEPs want to increase emission reductions target to 60% by 2030

A geared turbofan at Pratt & Whitney's production hub in West Palm Beach (copyright: Pratt & Whitney - a UTC Company- 2018; Source: Pratt & Whitney's website, media center)

The EU Commission approves UTC’s acquisition of Rockwell Collins under conditions

Slovakia and its failure to abide by the European law

How to help an ageing population stay wealthy for longer

Soil pollution ‘jeopardizing’ life on Earth, UN agency warns on World Day

“Beyond the beach: tackling plastic pollution upstream”, a Sting Exclusive by Erik Solheim, Head of UN Environment

Google’s bare truth: Europe’s Chief denies EU accusations but admits they “don’t always get it right”

FROM THE FIELD: Persons with disabilities bike towards sustainability

Our health systems are under pressure. Here are 9 ways to remedy that

Hardware is a cybersecurity risk. Here’s what we need to know

Hatred ‘a threat to everyone’, urges Guterres calling for global effort to end xenophobia and ‘loathsome rhetoric’

What talent means in the post-COVID-19 workplace

What will Germany look like after the next election?

New legislation on transparency and sustainability of the EU risk assessment model in the food chain

This woman changed the world of work – and you’ve probably never heard of her

‘Grave consequences’ await if new deadly escalation of violence in Gaza continues – top UN official

The Dead Sea is drying up, and these two countries have a plan to save it

African elephants under continued threat of poaching, warns UN-backed report

AIESEC Vlog

Four million have now fled Venezuela, UN ramps up aid to children who remain

Ercom, cutting-edge Telco solutions from Europe

As ride-hailing firms drive into the future, who is being left behind?

Syrian crisis: €5.3 billion mobilised by donors for 2021 and beyond at 5th Brussels Conference

Carnage must stop in northwest Syria demands Lowcock, as attacks intensify

New round of bargaining for the 2014 EU budget late in autumn

Sudan: European Union provides €30 million in humanitarian assistance

At last Germany to negotiate the costs for a really cohesive Eurozone

UN evaluates progress in improving peacekeeping performance

The US + Britain trivialize mainland Europe, NATO and the EU

Khashoggi case highlights ‘very worrying practice’ of overseas abductions, says UN expert

What does global health translate into?

How Costa Rica’s environment minister talks to his daughter about climate change

Polluted lungs: health in the center of environment discussion

Here are 3 lessons Europe can learn from China’s flourishing start-ups

Geopolitics and investment in emerging markets after COVID-19

Canada needs to increase foreign aid flows in line with its renewed engagement

EU Ombudsman investigates the European Commission

Coronavirus: EU global response to fight the pandemic

SCADA Security Conference 2017 in Prague, Czech Republic

Brexit: Six more months of political paralysis or a May-Corbyn compromise?

COVID-19 vaccination campaigns and their challenges

More Stings?

Advertising

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