Earlier this week (January 27) eurozone finance ministers met in the capital of the European Union before all 28 finance ministers met the following day. The meeting was the first to be headed by the Greek minister, Yannis Stournaras, who sought to clarify why Greece, which is currently holding the EU presidency, has not made much progress in its negotiations with the troika. The trio of the European Central Bank, the International Monetary Fund, and the EU Commission serves as Greece’s main creditor body, and it has recently commenced an inspection into how Athens is implementing its bailout agenda. Yet, the talks got stuck as both parties could not find a common ground on how to disburse the next instalment of the aid package to Greece.
In addition to the never-ending discussions about the properness of trio’s bailout procedures, the future of the banking union lingers high on this week’s agenda as well. Today, the terms of the treaty establishing a single resolution fund for financial institutions are due to be drafted at an intergovernmental conference of EU institutions and national governments. The European Commission is also to publish suggestions on the European banking sector that should separate agendas of financial institutions, effectively decreasing too much risk-taking by lenders.
According to the leaked versions of the draft, the EU executive is suggesting to prevent big banks from proprietary trading, when banks take bets on markets with their own money rather than with a customer’s. Different sorts of trading such as derivatives or complex securitisation might also be separated from a bank’s deposit-taking arm. Yet, the EU’s major economies – Germany, Italy and France – are hoped to reject such proposals due to the fear that their biggest and most important banks could break up.
