Wednesday

28th Sep 2016

Germany denies stalling on banking union

  • A treaty change would slow down an already slow process (Photo: lincolnblues)

The German government Wednesday (17 April) denied it is stalling on the eurozone's "banking union," but says the plans would require an EU treaty change which could take years.

"We are not suddenly asking for a change in the EU treaty and I categorically reject the assertion that we are putting the brakes on the banking union," German finance ministry spokesman Martin Kotthaus said during a press conference in Berlin.

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.

He listed "important steps" already made by the EU in the past year on setting up a joint supervisor for the eurozone's largest banks within the European Central Bank.

He added that Germany is being "very constructive" when it comes to drafting joint rules on how to wind down failings banks or on harmonised deposit guarantees.

But Kotthaus insisted there needs to be "solid base in the EU treaties" for new institutions such as a planned "resolution authority" having the power and money to cover for bankrupt banks

He also said the solid base would be needed for a eurozone-wide deposit guarantee scheme.

The two concepts imply German banks or the German state would be partly liable for failing banks in other euro-states.

"This is nothing new, finance ministers in Dublin all agreed that for such a far-reaching step there needs to be a treaty change. But this has nothing to do with us being constructive and dynamic on joint supervision and the other steps of banking union," Kotthaus said.

In Brussels, Germany's insistence on treaty change - a de facto veto as treaty negotiations usually take years - is widely seen as being linked to the German elections in September.

"According to the EU council legal service, a banking resolution authority can be done without treaty change," one EU source told this website.

"But Germany doesn't like it and wants to kick it in the long grass. Any progress will remain on freeze until September," the source added.

For its part, the International Monetary Fund on Tuesday urged the EU to complete the banking union as swiftly as possible, warning that Europe is falling behind the US, with sluggish growth in Germany and recession in most other European countries.

The German stance does not come as a surprise, however.

"Germans have been mentioning the treaty issue a few times over the last years. It's not that they're stepping on the brakes, but they're afraid of elections and their Constitutional Court," Carsten Brzeski, the chief economist of ING Bank told EUobserver.

He pointed out that Berlin "doesn't even have to slow down the process," as the EU machinery is slow enough on its own and such ideas take at least three years to be put into practice.

Even if a banking resolution authority were to be in place tomorrow, it would not reduce the fiscal and economic problems in Spain, Italy or France, he added.

"The destiny of the eurozone is not in the hands of Berlin, but of the southern countries. Over the next few months, it will matter if unemployment continues to rise or stabilises, if there will be southern unrest, if they will start withdrawing from the reforms agenda," Brzeski said.

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.

Stakeholders' Highlights

  1. World VisionNew Tool Measuring Government Efforts to Protect Children Released
  2. GoogleDid You Know Europe's Largest Dinosaur Gallery Is in Brussels? Check It Out Now
  3. IPHRHuman Rights in Uzbekistan After Karimov - Joint Statement
  4. CISPECloud Infrastructure Providers Unveil Data Protection Code of Conduct
  5. EFAMessages of Hope From the Basque Country and Galicia
  6. Access NowDigital Rights Heroes and Villains. See Who Protects Your Rights, Who Wants to Take Them Away
  7. Martens CentreQuo Vadis Georgia? What to Expect From the Parliamentary Elections. Debate on 29 September
  8. EJCAppalled by Recommendation to Remove Hamas From EU Terrorism Watch List
  9. GoogleBringing Education to Refugees in Lebanon With the Clooney Foundation for Justice
  10. HuaweiAn Industry-leading ICT Solution Provider and Building a Better World
  11. Belgrade Security ForumCan Democracy Survive Global Disorder?
  12. GoogleTrimming the Waste-Line: Weaving Circular Economy Principles Into Our Operations