Parliament toughens its position on banking union

European Parliament. Committee on Economic and Monetary Affairs (ECON) meeting, on “Eurozone banks supervision regime”. (In the forefront) Marino Baldini (S&D, HR) (second from left), Elisa Ferreira (S&D, PT), (third from left), Jean-Paul Gauzes, (EPP, FR) (second from right). Vote by a show of hands. (EP Audiovisual Services, 17 Dember 2013).

European Parliament. Committee on Economic and Monetary Affairs (ECON) meeting, on “Eurozone banks supervision regime”. (In the forefront) Marino Baldini (S&D, HR) (second from left), Elisa Ferreira (S&D, PT), (third from left), Jean-Paul Gauzes, (EPP, FR) (second from right). Vote by a show of hands. (EP Audiovisual Services, 17 December 2013).

The Conference of Presidents of the European Parliament reiterated the tough position of the legislative in relation to the Single Resolution Mechanism for failing banks. The SRM is meant to complete within the next four months the enactment of a real European Banking Union, according to the MEPs vision. In order to emphasise the decisiveness of the Parliament, its leaders underlined that, “If the negotiations do not move forward in a constructive manner, the EP reserves its right to put forward for adoption in plenary its first-reading position on the basis of the ECON Committee report”.

In detail, the Conference of Presidents (CoP), the leaders of the political groups, President Martin Schulz and the European Parliament negotiating team on the Single Resolution Mechanism (SRM), held an intensive discussion Thursday 16 January in Strasbourg on the state of play of the negotiations. The outcome of this meeting can be epitomised in the following passage of the Press release issued afterwards: “The Conference of Presidents and the negotiating team firmly reject the Intergovernmental Agreement approach on the SRM in the Council given that it undermines the Community Method and the Ordinary Legislative Procedure”.

Parliament sees a stalemate

It is obvious then that the “current state of play in the negotiations is not promising, given the wide differences between the Council and Parliament, meaning that no deal before the European elections in May is a distinct possibility”. This is something that the Council wants to avoid at any cost. The prospect of strong presence of Eurosceptic and extremist MEPs in the next Parliament after May elections may derail Berlin’s plans for a weak, ‘nationalised’ and politically biased European Banking Union. By the same token, the EU Parliament has decided that the SRM, being the second pillar of the banking union, should be politically unbiased and operate in complete transparency.

On the other side of the fence the Council, guided by Germany, on 18 December proposed “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”. This is the usual way of resolving an EU matter outside the standard EU procedures, sidestepping the Parliament and the Commission. However the Parliament has to give an initial consent for this intergovernmental conference, a prospect which is not visible as things stand now.

Who pays for what?

In any case the resolution fund will be the key instrument of the SRM, because it will pay for the cost of a resolution. According to the compromise reached at the ECOFIN Council, this cost will be covered almost exclusively by resources of the member state where the bank is based. This arrangement will be in force for at least the first four to five years, after the Banking Union starts its operations. Then gradually the cost of winding down a bank will be progressively shared by all member states and only in the tenth year the national resolution funds will merge into one.

This arrangement will be realised through an intergovernmental conference. The basic characteristic of this system will be the initial ‘nationalisation’ of resolution cost and the political patronage of the entire procedure, as Germany wanted and Paris didn’t oppose. Obviously, Berlin and Paris couldn’t accept to outright undersign the obligations for the resolution of say an Italian or a Greek bank. On top of that, the entire process of deciding and effectuating the resolution of a bank, by being under political control, will presumably give the prerogative to Germany and France, the two politically strong core members of Eurozone.

This is what the present European Parliament wants to avoid and this is what the next Parliament will presumably deny. Add to that and a kind of ‘command’ issued by the German minister of Finance Wolfgang Schauble, who asked the Parliament not to delay its approval of the Council’s decision, and the final outcome is, a perfect stalemate.

The next weeks will produce very interesting developments. Currently the ball is theoretically in the hands of the Greek Presidency of the Council, expected to propose a way out. In reality though, it’s the Commission that has to come up with a solution to, at least partially, satisfy all parties.

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

European Commission: the LED lights of your Audi A6 shall save our planet

A new approach to scaling-up renewable power in emerging markets

Ensure that widows are ‘not left out or left behind’, UN chief urges on International Day

COVID-19 wave III and the lessons learned

Threats from mammoth banks and Brussels fuel May’s poll rates

EU and Amazon cut deal to end antitrust investigation over e-books deals

MEPs urge EU countries to be transparent about their COVID-19 vaccine supplies

Here’s how private investors can turn plastic into gold

Still a long way to go to achieve gender equality in all EU countries

Africa is set to get its first vertical forest

‘Millions facing starvation’ – Global political and business leaders on the economic impact of COVID-19

How the gender commuting gap could be harming women’s careers

Will 2020 be the year blockchain overcomes its hype?

Progress in medical research: leading or lagging behind?

Bacteria vs. humans: how to fight in this world war?

The future of energy is being shaped in Asia

What we know and what we don’t know about universal basic income

The first new university in the UK for 40 years is taking a very different approach to education

OECD household income up 0.7% in first quarter of 2018, outpacing GDP growth

First seat projections for the next European Parliament

The energy industry is changing. Are governments switched on?

What is the IMF telling Eurozone about fiscal and banking unification?

Trump ‘used’ G20 to side with Putin and split climate and trade packs


Re-thinking citizenship education: bringing young people back to the ballot box

Commission issues guidance on the participation of third country bidders in the EU procurement market

Car rentals: EU action leads to clearer and more transparent pricing

What’s going on in Chernobyl today?

Here’s how we get businesses to harmonize on climate change

Why are the Balkans’ political leaders meeting in Geneva this week?

Support for EU remains at historically high level despite sceptics

US pardons for accused war criminals, contrary to international law: UN rights office

European Business Summit 2015: In search of a vision for the future

Brexit casts a shadow over the LSE – Deutsche Börse merger: a tracer of how or if brexit is to be implemented

Migrants and refugees face higher risk of developing ill-health, says UN report on displaced people in Europe

Autumn 2019 Standard Eurobarometer: immigration and climate change remain main concerns at EU level

Stop the waste: UN food agencies call for action to reduce global hunger

The term AI overpromises. Let’s make machine learning work better for humans instead

How blended finance helped to keep energy supplies flowing during COVID-19

What will a post-pandemic economy look like? Here’s what chief economists expect

Innovation is the key to the pay-TV industry’s long-term growth

Mergers: Commission approves GlaxoSmithKline’s acquisition of Pfizer’s Consumer Health Business, subject to conditions

Coronavirus: Commission launches call for innovative response and recovery partnerships between EU regions

Parliament names radio studio after journalists murdered in December attack

4 things to know about the state of conflict today

World-famous cultural institutions closed due to coronavirus are welcoming virtual visitors

As Houthi forces withdraw from key Yemeni ports, UN monitoring chief welcomes ‘first practical step on the ground’

Get out, stay out: how financial resilience helps end poverty

The ‘ASEAN way’: what it is, how it must change for the future

30 years of tissue engineering, what has been achieved?

Businesses are lacking moral leadership, according to employees

Mental health and suicide prevention

‘Perseverance is key’ to Iraq’s future, UN envoy tells Security Council

Belgium: Youth Forum takes legal step to ban unpaid internships

European Commission recommends common EU approach to the security of 5G networks

The Future of Balkans: Embracing Education

The European Parliament fails to really restrict the rating agencies

Gas pipeline in the European Union. (Copyright: EU, 2012 / Source: EC - Audiovisual Service / Photo: Ferenc Isza)

EU Investment Bank approves € 1.5bn loan for Trans Adriatic Pipeline (TAP)

Could Europe become the first climate-neutral continent?

Venezuela’s needs ‘significant and growing’ UN humanitarian chief warns Security Council, as ‘unparalleled’ exodus continues

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