168 hours left for MEPs – ECOFIN Council to deliver a Banking Union

European Parliament. Committee on Economic and Monetary Affairs (ECON). Meeting on banking supervision. Vote on the bank single resolution mechanism and fund. (EP Audiovisual Services).

European Parliament. Committee on Economic and Monetary Affairs (ECON). Meeting on banking supervision. Vote on the bank single resolution mechanism and fund. (EP Audiovisual Services).

Contradicting messages are emitted from a statement issued yesterday by the lead MEPs currently negotiating the details of the legislation on the Single Resolution Mechanism and Fund for Eurozone banks with the ECOFIN council. This legislation is set to complete the legal and structural background of the European Banking Union. The other pillar of the EBU, namely the Single Supervisory Mechanism is already functioning under the roof of the European Central Bank and will assume its full responsibilities on November this year.

The friction points

However, negotiations between the European legislators representing the Parliament and the Council have stuck on two important issues. The main friction points are firstly ‘who will press the button’ to resolve a bank and how ‘the bill will be footed’. The Parliament wants the Council to not be implicated in the ‘button’ mechanism in order for political horse trading to be avoided around this crucial decision. On top of that, the parliamentarians want to make sure that all banks will be treated equally irrespective of their country of origin. Understandably, if the Council will be in control of the resolution ‘button’, a German bank could be seen ‘differently’ from a Greek one.

Coming to the second point of friction between the legislative and the ECOFIN, which is the footing of resolution costs, the European Parliament wants a brief transitional period of three years to the full mutualisation of the financial responsibilities stemming from winding up a bank. On the other side of the fence, the Council wants a long transitional period of at least seven to eight years if not ten.
Last Tuesday the Greek Presidency of the council, which conducts the negotiations with the Parliament, received a new mandate from the ministers of Finance, seemingly leaving a wider maneuvering space than the previous unsuccessful one. The Press release issued yesterday by the Greek Presidency though allows it to be understood that almost all the crucial points are open. It says “These proposals included the following issues:
(A) which institution will be the ultimate resolution authority, the so called “Meroni institution” (balance of powers between the EU bodies)
(B) Who will determine whether an institution is failing or likely to fail,
(C) What types of decisions should be taken by the Plenary session of the Board and which by the Executive, in any individual resolution
(D) The voting regime in the Plenary session of the Board,
(E) The loan facility (credit line) to the Single Resolution Fund, and finally,
(F) The contributions to the SR Fund”.

Everything is in the air

From this catalogue one can conclude that not only every issue concerning the SRM and Fund is still on the air, but there is also controversy even on points which have already been decided and legislated upon. One of these cases is “(B) Who will determine whether an institution is failing or likely to fail”. According to the SSM Regulation “the ECB shall, in accordance with paragraph 3 of this Article, be exclusively competent to carry out, for prudential supervisory purposes, the following tasks in relation to all credit institutions established in the participating Member States:… to carry out supervisory tasks in relation to recovery plans, and early intervention where a credit institution or group in relation to which the ECB is the consolidating supervisor, does not meet or is likely to breach the applicable prudential requirements, and, only in the cases explicitly stipulated by relevant Union law for competent authorities, structural changes required from credit institutions to prevent financial stress or failure, excluding any resolution powers”.

In short, the powers of the ECB stop exactly before the resolution of a bank. As a result, the ECB is responsible to state if ‘a bank is failing or is about to fail’. Then the resolution authorities take over. It seems that Germany doesn’t like that either because decisions in the Supervisory Board of the single supervisory mechanism at the European Central Bank are taken by professionals and by simple majority. This fact excludes, in principle, any possible political interference. Seemingly, some member states which are ‘more equal that the others’ don’t like this simplicity.

Last deadline

In any case, the Press release issued by the lead MEPs who are negotiating all that with the Council seems equally ambiguous. It says that “We can now hope to have a constructive meeting next week in which concrete drafting can be made in a bid to reach a deal”. What every bona fide reader can conclude here is that the negotiations have come to the point of drafting what has been agreed upon, in order the text to be reviewed next week and possibly corrected. However, in the next sentence, the MEPs take a completely different stance by stating “We must reiterate however that we are not yet there and that the crucial issues are still all to be agreed if we are to have a deal on Wednesday under this Parliament.

After all that, the only safe deduction is that next Wednesday is the final date to conclude an agreement for the enactment the European Banking Union. If this deadline is missed the whole operation will be derailed and the ECB will not be able to guarantee anything in relation to Eurozone banks.

 

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

Stopping antimicrobial resistance would cost just USD 2 per person a year

North-east Nigeria displacement crisis continues amid ‘increased sophistication’ of attackers, warns UN

The US repelled EU proposals on common rules for banks

Any doubt?

EU: All economic indicators in free fall

UN-led Yemen ceasefire monitoring team gets ready to begin operations

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

‘Complacency is still strong’ over stopping genocide, says top UN adviser

The deforestation risks lurking in the banking sector

EC v Samsung: A whole year to compile a case

Africa-Europe Alliance: European Commission committed to a sustainable African agri-food sector

Seize the opportunities of digital technology to improve well-being but also address the risks

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

Our children’s career aspirations have nothing in common with the jobs of the future

Women’s leadership ‘critical’ to future of Niger

How to unleash the enormous power of global healthcare data

Trade surplus up production down in Eurozone

US must abide by humanitarian refugee accords: UN refugee agency

How do we really feel about women leaders?

LED lights could stop turtles and birds from drowning in fishing nets

“What a Wonderful World”: the unsettled relationship between Climate Change and Human Health

Council’s position on Visa Directive a step back for young people’s mobility

How can we produce enough protein to feed 10 billion people?

The challenges of mental health among the Syrian medical students

We can’t tell if we’re closing the digital divide without more data

Why is the EU launching a doomed policy in stopping immigrant waves? What are the real targets?

The next 48 hours may change the European Union

“America first” policy goes against EU-US partnership, say MEPs

Security Council urged to help spare Syrians from ‘devastation’

Destabilizing Lebanon after burning Syria; plotting putsch at home: King and Crown Prince of Saudi Arabia

European Union disenchanted with Turkey

A Sting Exclusive: “Cybersecurity: Why consumer products must be looked at urgently”, by BEUC’s Deputy Director General

ECB ready to counter the rise of the euro?

This Japanese company pays its employees to get a good night’s sleep

4 things to know about the state of conflict today

The developing countries keep the world going

Realise the beauty of unity in diversity

EU prepares itself to fight back against hostile propaganda

Lack of investment and ambition means Youth Guarantee not reaching potential

The psychology of pandemics

FROM THE FIELD: Survival in Yemen against all odds

African economies sustain progress in domestic resource mobilisation

Why are wildfires getting worse?

Tiny Iceland teaches the West how to treat bankers

Bundesbank’s President Weidmann criticises France and the EU. Credibility at risk?

Halt death sentences on children, UN rights expert urge Saudi authorities

Here’s how data could make our cities safer

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

Does hosting a World Cup make economic sense?

MWC 2016 Live: Roshan CEO opens up on Afghanistan challenges

EU labour mobility: Inconvenient truths for everybody

AI could be a silver bullet for healthcare in ASEAN

Companies that put employees first perform better

The Cold War had an unintended side effect: It created a European wildlife paradise

Lithuania vs Parliament over 2014 EU budget

Blockchain is facing a backlash. Can it survive?

5 lessons for social entrepreneurs on how to change the system

How the tech world could make nonprofits a more powerful force

Ministers for Youth miss the opportunity to improve social inclusion of young people

EU prepares a banking union amidst financial ruins

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