EU Commission: The banks are not obliged to finance the real economy

Press conference by Michel Barnier, Member of the European Commission, on the adoption of a follow-up Communication to the Green Paper on the Long-term financing of the European economy. (EC Audiovisual Services, 27/3/2014).

Press conference by Michel Barnier, Member of the European Commission, on the adoption of a follow-up Communication to the Green Paper on the Long-term financing of the European economy. (EC Audiovisual Services, 27/3/2014).

At a time when the Eurozone banks have received for free €4.5 trillion of taxpayers’ money and at least another €3 trillion from the ECB at close to zero interest rates, the Commission dares to ask the pension funds and the Internet to replace the banks in financing economic growth in the crisis stricken and now stagnating euro area. This seems to be the case with the Commission’s initiative for a “roadmap to meet the long-term financing needs of the European economy”, which was announced yesterday by three of its key members, Barnier, Rehn and Tajani.

Internal Market and Services Commissioner Michel Barnier, Olli Rehn, EC Vice-President for Economic and Monetary Affairs and the Euro and Vice-President for Industry and Entrepreneurship Antonio Tajani, joined forces yesterday to launch an initiative meant to put at risk Eurozone’s pension funds and mobilise charity through the Internet, in order to replace bank credits to long-term projects and the SMEs. The idea is to reduce the role of the occupational funds in securing old age pensions for small employers and self-employed workers and at the same time create the spectacle of doing things in favour of the small and medium businesses. Let’s take one thing at a time.

New burden for pensioners

Starting from the pension funds, one should not forget that they have been the main victims of the financial crisis of the last five years. All over Europe the pension funds paid the dearest price for the US credit crunch and the EU sovereign bond fallout. Bankruptcies of banks and governments hit primarily the pension funds despite the fact that their financial investments contained practically no risk elements, consisting mainly of bank deposits and sovereign bonds. Now the commission wants to further undermine the position of the occupational pension funds in the financial constellation of the Eurozone, by reducing their importance in the wider pension business.

The obvious target is to make room for increased intrusion of the banks in this financial sector. The relevant Commission document (European Commission – MEMO/14/239 27/03/2014) states that “Employers, including SMEs, are expected to benefit through the reduced cost of joining an existing occupational pension fund”. Understandably, if the small employer wants a more substantial superannuation scheme he can turn to a bank/insurance company for a ‘life product’.

It’s not only that though; the Commission also wants that the pensioners’ money is used to replace the banks in their duty towards the society as long-term creditors of the economy. The idea is to let the banks alone to ‘digest’ the trillions they have received for free, and mobilise the occupational funds in order to cover the gap in the long-term financing of the economy. To this effect, the same Commission document mentioned above also states that, “Provisions on investment restrictions would be modernised (as explained above) so that Member States could not restrict investment choices made by occupational pension funds (in particular in assets with a long-term profile such as infrastructure) if restrictions were not justified on prudential grounds”.

Charity for the SMEs

Last but not least, the idea of the Commission to issue a communication on crowdfunding to offer alternative financing options for SMEs (MEMO/14/240) is at least a bad public relations project. In this respect, the Commission wants to relieve the banks from their duty to finance the SMEs. The truth is that only the SMEs depend on the lenders for their financing. The large business groups and the multinationals can finance themselves directly from the capital markets and the private equity funds. In short, the only sector that really needs the banks for its credits, the SMEs, is now encouraged to directly tap the savings of the households through crowdfunding, touching the region of charity.

Once more the target is to leave the banks at ease to ‘digest’ the trillions they have received for free. In reality, the banks do not want to mix themselves any more with the financial needs of the largest part of the population. Indirectly this Commission initiative degrades the activity of SMEs financing to charity.

All in all, those two Commission initiatives are a straight recognition that the banks cannot or don’t want to play their role as the creditors of the largest part of the business sector that is the SMEs. The burden of two very important financial activities, real economy’s long-term financing and the credit to SMEs, are swiftly transferred to the civil society. The banks are left at ease to bet other people’s money to all and every market of the world. It becomes plain then that the banks are no more responsible as financiers of the real economy in most crucial sectors, long term projects and the SMEs.

 

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

Upgraded EU visa information database to increase security at external borders

The G7 should take the lead on ocean targets for 2020

From sun-powered trikes to mind-controlled TV – 10 top gadgets unveiled at CES 2020

Towards a tobacco free India

EU–US: What is the real exchange in a Free Trade Agreement?

EU cross-border payments outside Eurozone: MEPs scrap excessive fees

Malta: Human rights experts call for justice in case of murdered journalist

Statement by Cecilia Malmström, Member of the EC in charge of Trade, on the successful conclusion of the final discussions on the EU-Japan Economic Partnership Agreement (EPA) – Brussels, 08 Dec 2017. (Copyright: European Union; Source: EC - Audiovisual Service; Photo: Georges Boulougouris)

The EU and Japan seal free trade pact that will cover 30% of global GDP

Monday’s Daily Brief: WFP mulls ‘last resort’ Yemen aid suspension, top peacekeeping awardee announced, abuzz over Bee Day, Ebola threat ‘very high’

Collaboration and connectivity at ITU Telecom World 2019

Azerbaijan chooses Greek corridor for its natural gas flow to EU

This team of Saudi women designed an award-winning app to make the Hajj safer

DR Congo: Insecurity and attacks mean Ebola will keep spreading, warns world health agency

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

Colombia is a Latin American success story, but must pursue new reforms to achieve stronger and more inclusive growth

Force used against protestors in Gaza ‘wholly disproportionate’ says UN human rights chief

Companies ‘failing’ to address offline harm incited by online hate: UN expert

Greece at the mercy of ECB while sailing through uncharted waters

End ‘shame, isolation and segregation’ of fistula sufferers, urges UN reproductive health chief

This is how companies are working together to create a world without waste

Ukraine turns again to the EU for more money

Take care of your borders and then expand them

FROM THE FIELD: Stopping aquatic hitchhikers to safeguard environments at sea

“Be aware where you put your I Agree signature on and something else”; now Facebook by default opts you in an unseen private data bazar

Pakistan’s digital revolution is happening faster than you think

Smart cities must pay more attention to the people who live in them

How secure is blockchain?

The EU accuses Russia of bullying Ukraine to change sides

Medical students, climate change and health: an unorthodox combination

COP22 addresses a strong global pledge to effectively implement the Paris Agreement

6th Edition of India m2m + iot Forum to open its door on 14th January, in association with The European Sting

Landmark agreement will protect 100 European Geographical Indications in China

German banks suffer of nausea amidst rough seas

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

Aung San Suu Kyi defends Myanmar from accusations of genocide, at top UN court

Feeling the heat? This is how to keep cool as temperatures rise

Illicit trade endangers the environment, the law and the SDGs. We need a global response

EU approves disbursement of €500 million in Macro-Financial Assistance to Ukraine

How two colossal Assyrian icons were recreated using digital tech

Phone lines open between Ethiopia and Eritrea, and people are calling strangers

Commission’s Youth Initiative fails first hurdle by not sufficiently consulting young people

The European Parliament floating over the South China Sea

Charlie’s tragedy energized deeper feelings amongst Europeans; back to basics?

The EU banking union needs a third pillar guaranteeing deposits

Global Citizen-Volunteer Internships

Australian homes are turning to solar power in record numbers

Ebola in DR Congo: UN chief ‘outraged’ by recent killings of civilians and health workers

The creative technology and its advancements

Growing a future free of terrorism: UN News special report from Cameroon

The issues of practicing medicine in Pakistan

How migrants who send money home have become a global economic force

Air pollution, the ‘silent killer’ that claims seven million lives a year: rights council hears

External action: more funds for human rights, development and climate change

Pervasive corruption costs $2.6 trillion; disproportionately affects ‘poor and vulnerable’ says UN chief

How venture capital can transform global health

Security Council renews mandates of UN force monitoring separation area between Israel and Syria; AU-UN hybrid mission in Darfur

Activist investors are more powerful than ever. Here’s what that means for the economy

MEPs to prioritise environment and climate action in next long-term budget

3 things you need to know about securing a blockchain

UN rights chief says ‘bar must be set very high’ for investigation of murdered Saudi journalist

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