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.

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

‘No steps taken’ so far to end Israel’s illegal settlement activity on Palestinian land – UN envoy

COP21 Breaking News_03 December: Unprecedented Global Alliance for Buildings and Construction to Combat Climate Change

These are the world’s 20 most dynamic cities

Hazy ‘breakthrough’ saves PM May, leaves Ireland in limbo: Brexit

Discussion at Europe House: Brexit & Food

Youth2030: UN chief launches bold new strategy for young people ‘to lead’

EU-UK future relations: crucial to ensure EU leverage and unity

Why it’s good to turn your colleagues into friends

Why vaccines are not just for children

An all-out fight for the EU budget

Mental health and social isolation: how do have an active participation in self-care?

How scientists are turning living cells into the tiny factories of the future

UN atomic watchdog chief updates governing body on key North Korean reactor

Migrants and refugees are being forgotten in the COVID-19 response. This has to change

EU’s new environmental policy on biofuels impacts both the environment and the European citizen

International Day of Cooperatives sets stage for long-standing production and consumption

European Youth Forum welcomes establishment of new Youth Intergroup in the European Parliament

Eurozone slowly but surely builds its Banking Union

Is Britain to sail alone in the high seas of trade wars?

Africa-Europe Alliance: first projects kicked off just three months after launch

Obama turns the G20 summit into warmongering platform

OECD economic scenarios to 2060 illustrate the long-run benefits of structural reforms

Four years on and half a billion dollars later – Tax Inspectors Without Borders

COP21 Breaking News_03 December: Argentina Accepts KP Amendment

Rise in number of children killed, maimed and recruited in conflict: UN report

Europe to turn the Hamburg G20 Summit into a battlefield

Trade barriers are slowing plastic-pollution action. Here’s how to fix it

1 million citizens try to create a new EU institution

British PM May’s Brexit proposal remains obscure while her government unravels

Gender equality, justice in law and practice: Essential for sustainable development

We need to rethink cybersecurity for a post-pandemic world. Here’s how

North Korea: ‘Time to talk human rights’, says UN expert

With human rights under attack, UN chief unveils blueprint for positive change

A Sting Exclusive: “Cybersecurity Act for safer European Industries and Consumers against cyberthreats”, by MEP Niebler

Generation Z will outnumber Millennials by 2019

COP21 Breaking News_09 December: The Draft Agreement Updated

Elections in Britain may reserve a surprise for May’s Tories

The Czech economy is thriving but boosting skills and productivity and transitioning to a low-carbon productive model is vital to sustainable and inclusive growth

UN gears up emergency food aid for hurricane-struck region of Bahamas, as death toll rises

Is Eurozone heading for disinflation?

Humanitarian crisis in Yemen remains the worst in the world, warns UN

Fairer and clearer rules on social benefits for EU mobile workers agreed

Migration has set EU’s political clock ticking; the stagnating economy cannot help it and Turkey doesn’t cooperate

Why sustainable products are a win-win for all of us

Internet Forum: Prioritize technologies most needed for sustainable development

Why Eurozone urgently needs the ECB to print and distribute at least €500 billion

Health without borders: How we can Improve International Collaboration in Health Care

EU’s tougher privacy rules: WhatsApp and Facebook set to be soon aligned with telcos

Joint EU-U.S. statement following the EU-U.S. Justice and Home Affairs Ministerial Meeting

COP21 Paris: The Final Agreement Adopted-full text

Parliament criticises Council’s rejection of money laundering blacklist

Costa Rica has doubled its tropical rainforests in just a few decades. Here’s how

Franchise India 2016, returns in 14th year 

Who can unlock the stalled Brexit negotiations? UK Premier sticks to her proposal

Why South Africa is on a path of economic renewal

From Kenya to China, here’s why countries should start working together on AI

Who should be responsible for protecting our personal data?

How supply chain transparency can help businesses make the right calls

‘Well-being of two million’ in Gaza at stake as emergency fuel runs dry: UN humanitarian coordinator

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