Bank resolutions to remain a politically influenced affair

Economic and Financial Affairs Council (ECOFIN) meeting, 11/3/2014. From left to right: Vítor Constâncio, Vice-President of the European Central Bank, Klaus Regling, Chief Executive Officer of EFSF/ESM, Wolfgang Schauble, German Federal Minister for Finance. (Council of the European Union Audiovisual Service, 11/3/2014).

Economic and Financial Affairs Council (ECOFIN) meeting, 11/3/2014. From left to right: Vítor Constâncio, Vice-President of the European Central Bank, Klaus Regling, Chief Executive Officer of EFSF/ESM, Wolfgang Schauble, German Federal Minister for Finance. (Council of the European Union Audiovisual Service, 11/3/2014).

Today in Strasbourg the three EU decision making bodies, the Council as represented by its Greek Presidency, the Parliament and the Commission, in a procedure called ‘trilogue’ will try to bridge their differences and come up with a ground breaking agreement to complete the European Banking Union. This is the most important project enterprised by the EU, after the introduction of the euro. The whole affair though is not without bitter confrontations. That’s why the time frame of the project has been violated.

As things stand now, everything has to be decided within this or next week, otherwise the whole venture may be derailed. However, this is unthinkable, because the European Central Bank has already commenced its own part of the operation, and has created the Single Supervisory Mechanism. This is a completely new service under ECB’s roof, the ‘Banking Supervision’. Under the new system of bank monitoring, the ECB will directly audit the 130 ‘systemic’ Eurozone banks. “It will work closely with the national competent authorities to supervise all other credit institutions under the overall oversight of the ECB. The ECB may decide at any time to take responsibility for a less-significant credit institution”.

ECOFIN backs Eurogroup

The last episodes in this sequel were performed yesterday and the day before in Brussels, in the double meetings of Monday’s Eurogroup and yesterday’s ECOFIN council of EU ministers of Finance. Friends are been deceived, alliances are broken and new ones are formed, governments and Parliaments are directly implicated. However, it seems that at the end of the day this is a game for a very restricted circle. Not every EU country can deceive the Commission in order to appear as abating to the European Parliament demands, but in reality aiming at the end to serve only its own interests. Not even Germany could do all that alone. It needs the involvement of France, with Paris in this affair having many special interests to protect. In short, Germany and France left the Commission yesterday out in the cold. Let’s see why.

With a bitter statement, EU Commissioner Michel Barnier rebuffed yesterday the decision by the ECOFIN council “not to change the balance of roles (n.b. on the decision making procedure to place a Eurozone bank into resolution) between the Council and Commission, on which it had agreed on 18 December 2013”. It must be reminded that on 18 December the ECOFIN had agreed on the following text: “Decisions by the board (n.b. this is the Bank Resolution Board which will decide to resolve a bank) would enter into force within 24 hours of their adoption, unless the Council, acting by simple majority on a proposal by the Commission, objected or called for changes”.

Where is the Commission?

It seems that now the ECOFIN is proposing to Parliament to leave out altogether the role of the Commission, in deciding about the resolution of bank. In the face of it this is to cut down the bureaucracy in a decision making procedure which has to be usually concluded within 24 hours or a weekend. In this way the Bank Resolution Board with its executive council and the Plenary will decide single handed to place a bank into resolution and also the details of it. According to the 18 December ECOFIN Press release “The board would consist of an executive director, four full-time appointed members and the representatives of the national resolution authorities of all the participating countries”. Obviously the governments and the politicians would have total control on this Board.

Very few things have been made known on the content of the new negotiation mandate that the ECOFIN handed over yesterday to the Greek Presidency. In any case, everybody will be today in Strasbourg to negotiate with the Parliament. The difficult part for the Presidency will be to persuade the Parliament to accept that the Resolution Board singlehanded will be able to decide everything on a bank resolution. According to Michel Barnier it seems that there is already agreement on the internal functions of the Resolution Board. He said yesterday that “The decision-making rules in the single resolution board have been made more efficient and an agreement has been found on the parameters for calculating bank contributions to the single resolution Fund”.

However, Commissioner Barnier appeared yesterday as negotiating in the name of the Parliament. After criticizing the ECOFIN on skipping the role of the Commission from the function of the Board, he said loudly that this position of the Council is “rejecting one of the key demands of the European Parliament”. This is an obvious attempt to protect the Commission’s position by hiding behind the Parliament. Even if the legislators wanted to relent on this issue, Barnier tries to make it even more difficult for them.

Article 114 of the Treaty

Yesterday, the ECOFIN as if answering the objections of the Commission, stated that “The regulation (on the Single Resolution Mechanism), based on article 114 of the Treaty on the Functioning of the European Union, requires a qualified majority for adoption by the Council in agreement with the European Parliament”. The European Commission is nowhere in the picture.

All in all, there is no doubt that a compromise will be found within the next days. The opposite option is out of question and undoubtedly the ECOFIN will make minor concession in order to safeguard its prerogative on bank resolutions.

Advertising

Advertising

Advertising

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

ECB ready to counter the rise of the euro?

US and Mexico child deportations drive extreme violence and trauma: UNICEF

This young scientist is tackling food insecurity for the world’s most vulnerable groups

Nicaragua must end ‘witch-hunt’ against dissenting voices – UN human rights experts

Who will win the AI race? If countries work together, then the answer could be all of us

Africa Forum aims to boost business, reduce costs, help countries trade out of poverty

Here are six bold ideas to accelerate sustainable energy innovation

FROM THE FIELD: Photos highlight agony of West African civil wars

Oslo leads the way in ‘Breathe Life’ campaign for cleaner cities in climate change era

Syria: UN-backed watchdog says chemical weapon ‘likely used’ in February attack

ECB: The bastion of effective and equitable Europeanism keeps up quantitative easing

We can end TB right now. Here’s how

A skills gap is jeopardizing efforts to end energy poverty

Syria: WHO appeals for funding to sustain critical health care for millions trapped by conflict

Intel, Almunia and 1 billion euros for unfair potatoes

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

Changing for the change: Medicine in Industry 4.0

Can elections in Italy and Germany derail Eurozone?

First-ever global conference of national counter-terrorism chiefs will strengthen cooperation, build ‘resilient’ States, says top UN official

Informal meeting of heads of state or government, Sibiu, 09/05/2019

Bahamas: ‘Clock is ticking’ to help those who lost everything in Hurricane Dorian, says UN

China and UK relations post Brexit as EU addresses Chinese takeovers

Gaza probe finds ‘reasonable grounds’ Israeli forces committed international human rights violations

India’s strategy in space is changing. Here’s why

Boat made of recycled plastic and flip-flops inspires fight for cleaner seas along African coast

Yellen and Draghi tell Trump and markets not to expedite the next crisis

Three ways the Fourth Industrial Revolution is shaping geopolitics

Prosecution of Paraguay judges over peasant ‘massacre’ ruling could undermine rule of law: UN expert

Electronic cigarettes: is it really a safe alternative to smoking?

What business leaders can learn from jazz

U-turns on Global Compact ‘reflect poorly’ on countries concerned: senior UN migration official

We must stop choking the ocean with plastic waste. Here’s how

The three sins the EU committed in 2015

The challenges of Chinese investment in Latin America

Investing in rural women and girls, ‘essential’ for everyone’s future: UN chief

TTIP 9th Round marked by American disappointment: Will some optimism save this trade agreement?

Governments should renew efforts to reform support to agriculture

New Zealand can improve well-being through better policymaking and reforms to housing and migration policy

The psychology of pandemics

3 ways activists are being targeted by cyberattacks

Venezuela migrant crisis begs a ‘coherent, predictable and harmonized’ response: UNHCR

The EU approves a new package of budget assistance to the Republic of Moldova to support rule of law and rural development reforms

Britain in chaos: May stays as Tory leader and PM but none can defuse the Brexit time bomb

Cameron’s “No Brexit” campaign wins top business support as Tory front breaks

Is euro to repeat its past highs with the dollar?

Give a chance to the brothers of Ailan: reception of refugees in Greece

MEPs reject making EU regional funding dependent on economic targets

Why the agtech boom isn’t your typical tech disruption

3 of Jack Ma’s best pieces of advice

UN, Somali Government seek $80 million in immediate relief for flood-affected populations

Greenpeace’s saints and sinners in the tech world

G7: A serious setback hardly avoided in iconic Biarritz

Deal on faster exchange of non-EU nationals’ criminal records

Financiers can turn the world into a dirty and dangerous place

Parliament compromises on Banking Union but sends market abusers to jail

EU members commit to build an integrated gas market and finally cut dependency on Russia

Is the European Banking Union an impossible task?

Malaysia can show the way towards a holistic model for human rights

A Sting Exclusive: EU Commissioner Mimica looks at how the private sector can better deliver for international development

WHO and UNICEF in campaign to protect 1.6 million in Sudan from cholera

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