European leaders are meeting in Brussels on December 19-20 to discuss the banking union, job creation, and growth-enhancing policies. The main point of the debate, however, focuses on the issue of resolution mechanism for the banking union, which will be used to decide what to do with the banks which get insolvent. In order to do so, the EU set aside 55 billion euro in order to set up a fund that will cover the costs of banks’ insolvency.
This should ideally minimize the amount of money covered by taxpayers needed for helping out failing banks as well as to deal with collateral damage. Leaders have also decided to create a new body that will decide what bank will go bankrupt and under what terms its bankruptcy will be dealt with. This is believed to be the biggest centralization policy since the launch of the common currency, which is why the non-euro countries are not part of the package. The project of the banking union is expected to be finalized before the stress tests come into force. The stress tests are hoped to reveal the real status of banks’ capital and assets. The European Central Bank (ECB) has been put in charge of the project.
Except for the banking union, the summit will also deal with another issue on the agenda which is tighter defense co-operation. The European Commission envisages savings in the defense system, while stressing that there is a lot of duplication in Europe’s armed forces. For reference, Europe’s defense industry employs approximately 750,000 people throughout the Union. As to other issues, Britain’s David Cameron is expected to raise the issue of migration, and labor market restrictions that could be also discussed. France, for instance, has already heated up the debate on so-called posted workers – temporary workers brought in from another EU state.
