The proposed plan of an EU banking union is threated by limitations in legislation found by European lawyers. The main concern raised by the EU Council’s legal body is the link created between indebted EU countries, their banks and the banking union. This connection faces a number of political and economic complications especially when banks run into problems.
Germany, the eurozone’s biggest economy, is worried especially about who will close a troublesome bank or who will pay the bill. Forming a new board or a committee for such a purpose is not a solution, layers argue, as it is risky to empower a new institution with too many powers. Moreover, Berlin is concerned about going too hastily to bail out ailing banks in the eurozone’s economies.
An alternative opinion states, by contrast, that this responsibility should be given to an already existing EU institution, such as the Commission, to ensure that the arrangement complies with acquis communautaire. Yet this solution does not suit Germany, which is in turn worried about giving too much authority to the Commission. In fact, the proposal was made by the Commission itself, and is now left to be decided by member states. Since Germany is unlikely to support further empowerment of the Commission in this regard, the country has hinted that there might be a need to amend the EU treaty to fit the newly emerging structure, which is naturally politically very fragile.
The objective of the banking union is mainly to strengthen financial cooperation after the crisis and gain investors’ confidence back. The first step towards a banking union is to take place in about a year.
