Commission seeks banking union without treaty change
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The European Commission wants to speed up reform of the banking industry but has distanced itself from German insistence that European Union treaty change is necessary first.
Wolfgang Schäuble, the German finance minister, used a meeting of his counterparts from across the EU on Friday and Saturday (12-13 April) to push for treaty revision to shore up the legal basis of banking union.
Finance ministers on Saturday came to political agreement on what the Commission calls the “first pillar” of banking union: giving the European Central Bank (ECB) the role of banking supervisor for countries in the eurozone and any other EU member states that want to participate.
During the meeting in Dublin, Schäuble succeeded in getting a “declaration” attached to the agreement. This said that the EU should consider incorporating the ECB’s new role into the EU treaties if and when a revision takes place.
Since negotiations started last year, Germany has been wary of pushing ahead too quickly with banking union, and has repeatedly raised the possibility of treaty change.
However, the Commission is determined to make proposals for the ‘second pillar’ of banking union – a single bank resolution and recovery fund – as early as June. EU officials say although the creation of such a fund might be legally more sound with treaty change, their lawyers are satisfied that it can be done without.
Commission officials want banking reforms implemented rapidly – which they view as unlikely if a politically sensitive process of treaty change has to take place first.
EU officials with knowledge of the meeting on Friday and Saturday said that although Schäuble was forthright in his attitude to treaty change, he did leave the door open to make progress without it. Other finance ministers, including France’s Pierre Moscovici, took the opposite approach and wanted to push ahead with banking union without treaty revision.
Michel Barnier, the European commissioner for the internal market, is of the same view as Moscovici. After the finance ministers’ meeting last Friday he stated that reforms were possible “within the framework of the current treaties”. And he told MEPs in Strasbourg yesterday (17 April): “We have to move faster and push reform right to the very end as quickly as possible.”
Backing from MEPs
The Commission’s determination to propose a single resolution fund in June was welcomed by MEPs. “We must stop acting in such an ad hoc fashion because the crisis will continue deepening if we don’t establish a permanent European solution,” Guy Verhofstadt, the leader of the Liberal group in the Parliament, said yesterday. “We need a single resolution mechanism funded by the banks themselves, and a common resolution fund, and no more bailing in of tax payers, depositors, or investors.”
An interim bank resolution measure, ensuring that all EU member states have common resolution rules and setting out the hierarchy of who should pay when a bank collapses, is still to be agreed by the Parliament and Council of Ministers.