Tuesday

27th Sep 2016

Analysis

Germany out on top after late-night summit

  • The German Bundestag will have a say each step of the way when setting up the banking union (Photo: BriYYZ)

EU leaders left Brussels Friday (19 October) after having spent the best part of the meeting tweaking wording on a banking union that was supposed to have been clear in June.

They went back to their hotels at a bleary-eyed 3am on Friday. But for all the lengthiness, the end result was practically the same for Berlin - the European banking supervisor will not be up and running any time soon.

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 issue is key. Without the supervisor, the eurozone bailout fund will not be allowed to directly recapitalize ailing banks.

Speaking after the summit, German Chancellor Angela Merkel - who has been pushing for more fiscal discipline among member states before she will accept opening up German coffers - said that there was a clear order of tasks to follow.

A legal basis should be set out by the December meeting of EU leaders, with finance ministers tasked to do the job.

Then comes the building up of the supervisory authority. Only when this is “able to work” can direct bank recapitalization begin.

While the concluding statement says that “work on the operational implementation will take place in the course of 2013” there are many potential pitfalls on the way.

Merkel acknowledged as much saying that alone trying to have a legal framework in place by 1 January 2013 is “very ambitious.”

Then there have to be negotiations with the European parliament. And then up to 300 staff will be needed for the new body.

“These people have to be found. They have to be employed," said the chancellor.

It is also still unclear how the new supervisory authority would work with the existing European Banking Authority - a body co-ordinating work of all EU national supervisors - or how to deal with non eurozone countries that have banks in euro countries.

Meanwhile not all of the 6000 eurozone banks are equal. They will be supervised in a “differentiated” manner, with some remaining under the oversight of national authorities.

And aside from the legal and political questions at the European level, there are potential domestic hiccups. Each step of the way, Geman MPs will have to give the green light

According to Merkel, they will have their say when the legal framework is produced, when the supervisory body is considered up and running and when it comes to requests for the eurozone bailout fund (ESM) to recapitalise banks.

There has been much speculation about whether the chancellor is delaying the banking union question until after the general election next September. She herself noted that one expert suggested the functioning supervisory authority would probably be in place only at the beginning of 2014.

But Merkel said she had "never even thought about that."

Still there was a burst of laughter when she mistakenly said that the banking supervisor would not be in place before 2030. She quickly corrected herself to 2013.

Investigation

Diesel cars still dirty, despite huge EU loans

The European Investment Bank lent billions to carmakers, in part to clean up diesel cars. But diesel cars are still dirty, prompting questions if the money was well spent.

EU redoubles attack on roaming charges

After an embarrassing U-turn last week, the EU commission has proposed to abolish roaming charges by June next year. Only "abusive" clients to pay.

Stakeholders' Highlights

  1. EFAMessages of Hope From the Basque Country and Galicia
  2. Access NowDigital Rights Heroes and Villains. See Who Protects Your Rights, Who Wants to Take Them Away
  3. Martens CentreQuo Vadis Georgia? What to Expect From the Parliamentary Elections. Debate on 29 September
  4. EJCAppalled by Recommendation to Remove Hamas From EU Terrorism Watch List
  5. GoogleBringing Education to Refugees in Lebanon With the Clooney Foundation for Justice
  6. HuaweiAn Industry-leading ICT Solution Provider and Building a Better World
  7. World VisionUN Refugees Meeting a Wasted Opportunity to Improve the Lives of Millions of Children
  8. Belgrade Security ForumCan Democracy Survive Global Disorder?
  9. YouthProAktivEntrepreneurship, Proactivity, Innovation - Turn Ideas Into Action #IPS2016
  10. GoogleTrimming the Waste-Line: Weaving Circular Economy Principles Into Our Operations
  11. Crowdsourcing Week EuropeDon't Miss the Mega Conference to Master Crowdsourcing, Crowdfunding and Innovation! 10% Discount Code CSWEU16
  12. ACCAKaras Report on Access to Finance for SMEs in a Capital Markets Union