Saturday

23rd Jul 2016

Spain may speed up EU 'banking union'

  • EU politicians have been making increasingly gloomy statements about the eurozone (Photo: David Dennis)

The US has joined ranks with EU officials exploring ways to pump eurozone money directly into Spain's troubled banks instead of having to further burden the state budget.

"We were talking about the possibility that the banks, not only Spain's but also in other countries who need it, could access funds directly without intervention from the governments and without conditions," said Spanish deputy PM Soraya Saenz de Santamaria after meeting US finance minister Timothy Geithner in Washington on Thursday (31 May).

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

"The treasury secretary indicated that we are working in the same direction and that we must find a solution for the banks," she added.

Meanwhile, an International Monetary Fund official at a conference in Brussels on Thursday also pressed for "decisive steps" in what is now generically being called a "banking union."

"Such steps would involve providing banking support from a common resource pool independent from national sources, sooner rather than later," IMF deputy chief Nemat Shafik said, a month before an EU summit where leaders are set to discuss the way forward for the eurozone, including the possibility of a banking union.

European Central Bank (ECB) chief Mario Draghi, one of the architects of the eurozone plan, on Thursday told EU parliamentarians in Brussels that the euro set-up in its current form was "unsustainable."

"The next step ... is to clarify what is the vision a certain number of years from now. The sooner this is specified, the better it is."

In Draghi's view, a banking union would need to be supervised centrally, guarantee deposits for the banks' customers and set up a joint bail-out fund banks would contribute to.

Draghi also criticised the handling of Bankia, a major Spanish bank bailed-out by the state, whose total bill is still unclear after having been revised several times.

"There is a first assessment, then a second, a third, a fourth,” Draghi said. "This is the worst possible way of doing things. Everyone ends up doing the right thing, but at the highest cost."

A similar sense of urgency in reforming the eurozone architecture was given by Italy's central bank governor, Ignazio Visco, who that same day in Rome said: "There are now growing doubts among international investors about governments' cohesion in guiding the reform of European governance and even their ability to ensure the survival of the single currency."

Italy, as well as Spain, has seen its borrowing costs rise not only due to national economic problems, but also due to market fears that Greece may leave the eurozone.

Italian Prime Minister Mario Monti on Thursday urged Germany to reconsider its opposition to having common defences in order to shield Italy and Spain from contagion, while EU economics commissioner Olli Rehn called for "a much upgraded common capacity to contain common contagion."

Germany's fears of increased inflation were undermined by the latest eurozone statistics, which showed that inflation decreased to 2.4 percent in May from 2.6 percent in April on average in the euro area.

In Germany, inflation fell even more - to 1.9 percent in May compared to 2.1 percent the month before. The ECB's target is to keep inflation around 2 percent.

EU to tweak rules on Chinese 'dumping'

The EU Commission has tried to fudge the issue of whether China is a “market economy” amid efforts to protect European industry from cheap exports.

Court ruling puts Renzi bank plan in doubt

EU court ruling on bank bailouts has raised the likelihood of a political embarrassment for Renzi, months before a referendum puts his future and, potentially, Italy’s euro future on the line.

Stakeholders' Highlights

  1. Belgrade Security ForumMigration, Security and Solidarity within Global Disorder: Academic Event Agenda for 2016
  2. GoogleHow Google Fights Piracy: Creating Value While Fighting Piracy
  3. EJC"My Visit to Israel" - Opinion by MEP Lopez Aguilar, Chair of the EP Working Group on Antisemitism
  4. World VisionChildren Migrating, Out of School and at Work as Hunger Deepens in Southern Africa
  5. European Healthy Lifestyle AllianceStand-Up (and Exercise) to Prevent Chronic Diseases
  6. Centre Maurits CoppietersLaunches a Real-time News Hub Specialised in EU Stakeholders
  7. Dialogue PlatformFethullah Gulen Calls for International Probe Into Turkey Coup Allegations
  8. GoogleEU-US Privacy Shield: Restoring Faith in Data Flows and Transatlantic Relations
  9. World VisionWorld Leaders & Youth Advocates Launch Partnership to End Violence Vs. Children
  10. Counter BalanceReport: Institutionalised Corruption in Romania's Third Largest Company
  11. Access NowEuropol Supports Encryption. We Can Relax Now… Right?
  12. GoogleLearn about Google's projects across Europe on Twitter @GoogleBrussels

Latest News

  1. Munich attack might not have been terrorism
  2. A very British (and Corbynite) coup
  3. Poland 'changing for the worse' for Muslims and refugees
  4. EU aims to lift visas on Turks despite purge
  5. ECB in ‘bail-out’ of scandal-tainted VW
  6. EU failed to learn lesson from Brexit, Poland says
  7. UK accord on EU workers 'crucial', France says
  8. EU and US take different lines on Turkey crackdown