EU finance ministers met in Brussels yesterday (9 December) to try to resolve ongoing differences over the ambitious plan to establish a banking union. This time, however, bail-outs of the EU’s most fragile were not on the agenda as Ireland and Spain are exiting their programs. The ministers were hoping to finalize the issue of the current proposal of the single resolution mechanism for eurozone banks. The idea of the proposal is to create a single set of rules that will define insolvent banks and financial institutions and a single authority that will hold them accountable.
The Economic Affairs Committee of the European Parliament provided their own view on the draft of November trying to put more pressure on national governments in the run-up to the upcoming EU elections which are due to take place in May next year. Yet, Germany has already expressed its dissatisfaction with the single supervisory authority of the banking union to be tied to the functions of the European Commission. In Berlin’s opinion, this could provide Brussels with too much control over the financial system. Moreover, Berlin is also rather skeptical about the creation of a single “back-up” fund to cover any potential bail-out. According to the current proposals, such a fund should be mainly financed by the European Stability Mechanism, though MEPs want to additionally establish a “public loan facility” to provide more back-up cash for both national and EU funds.
The entire legislation that is being drafted is supposed to establish a hierarchy of creditors – mostly shareholders and bondholders – that would be “looked up to” in case of trouble. These rules are to apply to all 28 EU member countries.
In the meantime, EU institutions seem to be trying to meet the self-imposed Christmas deadline. The EU Parliament is expected to finish the overhaul of the common fisheries policy on December 10, which should also encompass changes to the controversial issue of throwing unwanted fish back to the sea. Moreover, deputies will vote on an agreement on fisheries with Morocco, and elsewhere the Parliament is hurrying to give its consent to laws reforming EU’s mortgage market.
