ECOFIN: Choosing between the re-unification of Eurozone and a stalemate

European Parliament. Committee on Economic and Monetary Affairs (ECON) meeting. Vote on the bank single resolution mechanism and fund. Sharon Bowles (ALDE, UK) ECON chairwoman, pictured here. (EP Audiovisual Services).

European Parliament. Committee on Economic and Monetary Affairs (ECON) meeting. Vote on the bank single resolution mechanism and fund. Sharon Bowles (ALDE, UK) ECON chairwoman, pictured here. (EP Audiovisual Services).

Tomorrow’s Economic and Finance Ministers Council (ECOFIN) set to be convened in Brussels, the first under the Greek Presidency, will have the crucial task to decide on the construction of the European Banking Union. In view of that, the European Parliament sent a letter to the Greek Presidency of the Council, rejecting both the legal base and the subject matter of a planned Intergovernmental Conference. This Intergovernmental option has been adopted by the ECOFIN in December. It is aimed at regulating the Resolution Fund for failing Eurozone banks. Through this Conference, which is the equivalent of an ‘international agreement’, the Council wants to avoid the ordinary legislative procedure of the EU, in violation of the scope, the impartiality and the effectiveness of the resolution procedures of failing banks.

The letter, sent to the Presidency on 15 January, is signed by the Chairwoman of the Committee of Economic and Monetary affairs Sharon Bowles, the Rapporteur and all the Shadow Rapporteurs of the Committee. This means that all the major political parties of the European Parliament disagree with the Berlin imposed ‘invention’ of this Intergovernmental Conference and Agreement, which is nothing more than an international pact outside the EU standard procedures.

Berlin politically isolated

The idea for this Intergovernmental Conference – being convened in order to decide the details of the Resolution Fund for Eurozone’s failing banks – is that Germany doesn’t accept a uniform winding down procedure for all banks. The Resolution Fund is the key instrument in the whole affair of the Banking Union. It will also define the scope and the functioning of the Resolution Mechanism and the thereupon, the effectiveness and the credibility of the entire European Banking Union. No to forget that the EBU is the most important project that the Eurozone member states have embarked upon after the introduction of the common currency.

Unfortunately Germany managed to convince the member states during the ECOFIN council of 18 December, to agree on this Intergovernmental Conference option. The target of this decision is that the cost of winding down a bank should remain an exclusively national affair during the next four to five years. Only in the tenth year, sometime in 2025, the national resolution funds will merge into one.

However the European Parliament seems adamant and almost unanimous in its position not to accept the Intergovernmental, because, among other things, it sidesteps completely the legislative and the Commission. To this effect the Conference of the Presidents of the Parliament stressed that it backs the tough position of the Committee of Economic and Monetary affairs in relation to the Single Resolution Mechanism for failing banks.

The SRM is meant to complete the enactment of a real European Banking Union within the next four months. In order to emphasise the decisiveness of the Parliament, its leaders (the Conference of Presidents, the leaders of the political groups, President Martin Schulz and the European Parliament negotiating team on the Single Resolution Mechanism) clarified on 16 January 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”.

A crucial ECOFIN meeting

Tomorrow at the ECOFIN Council there will be for sure a far-reaching debate about all that. Berlin will have to face also the Commission, which sides with the Parliament in opposing the Intergovernmental solution. The tough question remains though that Germany is the main financial power with a triple A creditworthiness rate and understandably it will be obliged to undertake the bulk weight of guarantees for the Resolution Fund, in case of a mutualised liabilities solution.

This is exactly the friction point to be debated tomorrow and Germany has to decide if it backs a creditworthy and united Eurozone or it longs for a nationalised and unreliable version of the Banking Union where ‘everybody is for himself’. Obviously the rest of the euro area member states would point out to Berlin, that Germany cannot have just a seamless market for its products and pay no attention to the other facets of the Union. In any case the ECOFIN has to decide today if it will choose the confrontation path against the Parliament and the Commission, risking to leave the Banking Union project unfinished or go for the reunification of the Union?

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

EU Budget 2020 deal: Investing more in climate action, youth and research

This Danish scheme is offering free kayak rides… for picking up trash

UN chief urges restraint following reported Saudi-led assault in Yemen

The future of suicide and depression prevention

‘Pioneering’ former Chilean President Michelle Bachelet officially appointed new UN human rights chief

Resilience in times of pandemic

UN Security Council urged to act against ‘worst-case scenario’ Syria’s war-battered Idlib

UN Mission in Afghanistan gravely concerned about ill-treatment of prisoners by Taliban, following first-hand testimony

COP21 Breaking News_12 December: 195 countries adopt the First Universal Climate Agreement

Charges against Baha’i in Yemen must be dropped: UN experts urge release of detainees

Bolivia crisis: UN chief sends envoy to support peace, amidst renewed clashes

China Unlimited: an exclusive interview with the former Ambassador of Hungary to China

COVID-19 prisoner releases are not a matter of mercy, but of justice

World Retail Congress announces Dubai 2016 Hall of Fame Inductees

Brazil identifies a clear pathway for aligning its transfer pricing framework with the OECD standard

These countries have the most expensive childcare

UN chief welcomes agreement by rival leaders in South Sudan, as a step towards ‘inclusive and implementable’ peace

4 essential qualities for digital leaders

We can end TB right now. Here’s how

MEPs adopt new Fisheries Partnership with Morocco including Western Sahara

Commission adopts €4 billion investment package for infrastructure projects across 10 Member States

Ensuring the ‘lungs of the planet’ keep us alive: 5 things you need to know about forests and the UN

Apparently the EU Digital Single Market passes necessarily from China’s Digital Silk Road

European financial values on the rise

Merkel, Mercedes and Volkswagen to abolish European democracy

How much is nature worth? $125 trillion, according to this report

This is how Copenhagen plans to go carbon-neutral by 2025

European Business Summit 2014: Sting Report, Day I

EU to increase spending and improve delivery of education in emergencies and protracted crises

Can India reduce deaths on one hazardous road to zero? This group is trying

“No labels for entrepreneurs!”, a young business leader from Italy cries out

Plan for troop pullback ‘now accepted’ by rival forces around key Yemen port, but fighting intensifying elsewhere, Security Council warned

Reparations for sexual violence in conflict – ‘what survivors want most, yet receive least’

rescEU: EU establishes initial firefighting fleet for next forest fire season

National parks transformed conservation. Now we need to do the same for the ocean

Ambitious measures needed to ensure equal pay for women, say MEPs

This app lets you plant trees to fight deforestation

European Youth Forum @ European Business Summit 2015: Why interns should matter to business

This is what the world’s youngest prime minister said at Davos 2020

Latest leaked TTIP document confirms EU sovereignty may be under threat

Monsanto lawsuit ruling a ‘significant recognition’ of victims’ human rights, say UN rights experts

Policymakers can ensure the 4IR is fairer than the last three

Newly displaced fleeing attacks in northeast Nigeria, top 2,000

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

General Elections in Spain: Twitter organises the first digital debate to empower young people.

3 charts that show how attitudes to climate science vary around the world

Civil society can make sure no one is left stranded by the skills gap

Murder of Brazilian indigenous leader a ‘worrying symptom’ of land invasion

How cocoa farming can help stop deforestation

The relationship between Dengue and the rainfall in Boa Vista, Brazil

EU announces record €550 million contribution to save 16 million lives from AIDS, tuberculosis and malaria

Tusk fights back while charismatic Boris goes against everybody in Brussels pushing the UK to leave the EU now or never

COVID-19 underlines the importance of fintech in emerging markets

SMEs turning to alternative financing instruments as growth slows in bank lending

Parliament names radio studio after journalists murdered in December attack

OECD joins with Japan to fight financial crime by establishing new academy

Merkel had it her way with the refugees & immigrants but can Greece and Turkey deliver?

Commission moves to ensure supply of personal protective equipment in the European Union

Berlin to pay at the end for Eurozone banks’ consolidation

Most fish consumers support a ban on fishing endangered species, poll finds

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